‘Are they going to fall enough?’ The renters waiting for the house price downturn to change their fortunes

Australian renters had little reason for hope until a prolonged property price slump began offering something rare: a chance to escape.

When prices first began to ease in March, 26-year-old Canberra student George Lucas was sceptical. “They were talking about it falling and then it didn’t fall that much,” Lucas said. “That was the moment I was like, ‘oh, it’s all a bit ruined’.”

Now, as the downturn deepens, renters are holding their breath. Cotality data shows national prices have fallen 5.2% from their peak in March, bringing values below where they stood a year ago, with deeper falls in Sydney and Melbourne.

“I guess what everybody wants to know is, are they going to fall enough that it finally tips the dial and people can get in?” Lucas said.

“Or is it going to fall a bit, but leave everybody locked out?”

Many who expected they would never afford their own home are asking the same questions.

House prices have almost doubled since 2014 across Australia, according to Cotality. But they’re are now tracking for at least a 10% fall, the biggest in 40 years. Tenants have told Guardian Australia they are starting to see a chance that they or their children might leave behind a tight rental market and move into home ownership.

Readers from all stages of life responded to a Guardian reader callout to share their hopes for the slowdown. Mike, a 50-year-old Sydney software developer, said: “After never being able to afford to buy a house, maybe now I will.”

A Melbourne couple in their 30s, working in the social sector, said the insecurity of renting had stopped them starting a family. Rents have risen 25% in four years across Australia.

• Sign up for a weekly email featuring our best reads

“We’re hoping to start a family but have held off the past couple of years until we had secure housing,” they said. Now they hope to buy next year.

Tracey*, a 47-year-old single parent, missed her chance to buy into rural south-east Queensland’s property market – and saw her rent nearly triple in a decade.

The primary school teacher, who asked not to be named, said she could have bought a small home in the early 2000s – but didn’t realise the reformed capital gains discount, among other factors, was about to supercharge property prices.

She looked at buying again once her son started school in 2014, when she was paying $130 in rent, but home prices had already started to drift out of reach.

By 2024, a home loan was impossible and her rent had soared to $350 a week – in worsening conditions. Now she and her son live in a cabin on a friend’s property.

“By the time I’m actually approaching a bank and saying, hey, I want a loan, I won’t have enough years pre-retirement to be able to pay one off,” she said. But she hopes things may be different for her 17-year-old son.

“If house prices slow enough, he might still have a chance.

She is excited about the price fall – it could mean perhaps she and her son buy something together, Tracey said. But for herself, “I think I’ve probably missed that boat.”

Sooner than expected

When the federal government reformed property investor tax breaks in the May budget, housing affordability advocates cheered.

Many renters themselves were more muted in support, telling Guardian Australia at the time that they saw little sign things would improve.

There are roughly 3m households renting in Australia, about the same as the number of households who own without a mortgage. About 120,000 Australians enter the housing market each year.

The Albanese government initially predicted reform would only shave 2% off property price rises to help an extra 75,000 Australians into home ownership over a decade.

But prices have since fallen far further as the tax concession change for investors combines with four interest rate rises and persistent inflation to dampen demand, and the decline is now expected to endure into late 2027.

Some renters, surprised by the extent of the downturn, are taking the chance to buy at a discount. First home buyers are also eligible for a federal government 5% deposit scheme. Potential first time buyer Heem, a 33-year-old Melbourne pharmacist, said he expected to move into his own home next year.

“Reduced competition against investors coupled with the first home buyers schemes will help me [buy] sooner than I anticipated,” said Heem, who did not share his surname.

Loan enquiries for hopeful entrants to the housing market have risen since July to near their levels at the May budget, according to Loan Market, a mortgage broker group.

But breaking into the market still requires a strong, steady income, with the typical users of that first home buyer scheme earning far more than average Australians.

Prices have not yet fallen far enough to give a chance to single, low-income or older renters who can’t repay large, long-term loans.

Maeve*, 64, has rented in inner Melbourne for more than 30 years. She said she had hoped falling prices would finally let her into the market but she has been repeatedly outbid by “cashed up” first home buyer couples.

“There’s always others out there who are ready to scoop up the bargains.”

The recent retiree, who asked to remain anonymous, has no chance of getting a home loan and hoped to buy a property outright with her superannuation balance. Auctioneers and sellers are still asking for more money than she has to spend – for the moment.

“They’ve all started [bidding] where I wanted to finish,” she said. “If we have a sustained period of reduced prices, it might make a difference.”