Agents face tougher conversations as vendor discounting climbs

As more stock comes to market, agents could face greater pressure to convince vendors to adjust their price expectations and respond to changing buyer conditions.

According to Herron Todd White CEO Peter Maloney, August was the point when market anecdotes and data finally aligned, highlighting a clear change in conditions.

“Every so often, anecdotes and data finally meet, and in this market cycle, August is that moment.”

Maloney said that moment came as the Reserve Bank held the cash rate at 4.35 per cent, remaining at its highest level since late 2011.

“Before anyone reads that as the peak, the Bank’s own forecasts assume one more increase is more likely than not, with inflation back inside the target band late next year.”

He said that the higher-rate environment had flowed through to the housing market, with national dwelling values falling 0.7 per cent over July and 1.9 per cent across the quarter to the end of July.

“In both cases, these are the largest declines since December 2022,” Maloney said.

Listings rise as vendors face tougher conditions

Through their Australian Property Month in Review August 2026 report, Herron Todd White found that sales volumes over the quarter were also well below a year earlier, while total listings reached their highest level since 2020.

Median time on market had stretched to 44 days from 27, while vendor discounting had reached its largest level since May 2023.

“Tracking that discounting figure will be crucial over the next few months.”

For investors, Maloney said rising vendor discounting could open opportunities to negotiate as more stock hits the market and properties take longer to sell.

“Listings are climbing into spring against subdued demand. Many properties simply will not sell, and for most of the rest the only path to a contract is a price cut.”

“Vendors anchored to 2025 expectations will likely trail 2026 realities, and it could cost some dearly,” Maloney said.

Policy changes continue to reshape investor landscape

He said that the shift in vendor expectations came as policy changes added further pressure to parts of the property market.

“The budget’s negative gearing and capital gains tax changes have clearly deepened a slowdown already underway in some centres, and the ban on new limited recourse borrowing arrangements for residential property inside self-managed super funds has closed a funding channel for many investors.”

The report showed that building completions also remained well below target, with data centre and infrastructure projects drawing trades away from house construction.

At the top end of the market, Herron Todd White’s Prestige Index fell to 53 from 58, its largest single-month decline since launch, with Brisbane and the Gold Coast recording the largest movements.

Renovation, commercial and rural markets diverge

Renovation decisions were also being affected by the changing market conditions, although Maloney said the underlying reasons owners chose to improve rather than move had remained largely unchanged.

“The reasons owners improve rather than move remain largely unchanged, but the arithmetic has shifted.”

Materials shortages had eased, but building product prices continued to rise. Changes to capital gains tax had also made renovating to flip less attractive outside a principal place of residence.

Industrial property remained the steadiest sector of the commercial market, with strong first-half take-up and vacancies stabilising between three and 4.5 per cent.

“Scarcity of serviced land continues to push land values up,” he said.

In the rural market, conditions remained divided by region, with Western Australia and Victoria set for strong results, while northern NSW had recovered following useful winter rainfall.

“Western Australia and Victoria are set for strong results, and the north of NSW has recovered on useful winter rain, while the south needs a kind finish to the year.”

“The mid-June El Niño declaration makes spring a crucial period for the industry.”

With listings rising, selling periods lengthening and vendors increasingly needing to negotiate on price, agents could face tougher conversations around pricing and expectations as the market moved further away from 2025 conditions.