Two consecutive rate hikes have changed the mood in Australia's property market faster than almost anyone predicted.

Inflation re-accelerated, the Reserve Bank moved twice in quick succession, and consumer confidence dropped. The question most sellers are asking now is what that means for them.

We spoke to two of the country's leading buyer's agents to find out what the shift looks like on the ground — and what sellers can do about it.

A market on the move

The market moved relatively fast. Penny Vandenhurk of Purchase With Penny, who has been active through the shift in Sydney, said the change gathered pace once global uncertainty started feeding into buyer sentiment.

"Somewhere around mid-February, things started shifting in favour of buyers — and then it feels like that uncertainty of global economic challenges just really catapulted it," she explained.

Pete Wargent of AllenWargent Property Buyers confirmed the shift is visible nationally. Sydney and Melbourne have shouldered the brunt, with clearance rates dropping and asking prices having softened by a few per cent. For the mid-sized capitals, the picture is more encouraging.

"For Perth, Adelaide, and Brisbane, sentiment is a little more cautious, but prices are still rising overall," he said.

One thing both agents noted is that buyers have largely stopped being shocked by rate rises. The question has shifted from if rates go up to when, and that change in mindset is having its own effect on behaviour.

"The rate shock factor has dissolved," Vandenhurk said. "When rates went up two years ago, there was so much shock factor behind it. Now, it's a little bit less of if they go up and more a question of when they're next going up."

Which properties are still performing — and why

There's more nuance to the current market than the headlines might suggest. Not every market is doing it tough.

Both agents pointed to entry-level properties as the most resilient segment right now. First home buyers in particular are showing up with more confidence than those further up the price scale, and Vandenhurk puts that largely down to policy stability.

"First home buyers are the strongest pool of buyers at the moment," she said. "They've actually had real certainty for quite a long time now about what the first home buyer concessions are. I think it's the first time in a long time that first home buyers have had that certainty."

Wargent backed the point with data, noting that construction costs (already up around 40 per cent since the pandemic) look set to climb further, which tends to put a floor under established home values at the lower end of the market.

"Well-presented entry-level homes are still seeing strong levels of interest due to the surge in first homebuyers," he explained. 

"With the 5 per cent deposit scheme remaining in place, many prospective buyers are tapping their parents or grandparents to pool together funds and get onto the housing ladder."

Further up the price scale, buyers have become more selective. Properties with genuine points of difference, like a larger block, a unique layout, or a tightly held building, are still drawing solid interest. Anything compromised or overpriced is sitting.

"In this market, because buyers have choice, they're less willing to trade off anything," Vandenhurk said. "They're more like, well, I'll wait, because I think I'll find something better."

On renovation-ready properties, both agents agreed that buyers remain wary of purchasing homes that need substantial work done to be livable. 

"The appetite for taking on renovations is lower than normal, given the rising costs of trades and materials," Wargent said. "B-grade or compromised properties are not selling so quickly — especially in Sydney and Melbourne — and buyers have been able to negotiate more favourable prices and terms."

How sellers can put their best foot forward

The temptation in a softer market is to hold off listing until conditions improve or sentiment turns. It's an understandable instinct, but both agents pushed back on it.

Vandenhurk drew a parallel to mid-2020, when fear kept many buyers on the sidelines despite genuine opportunities, only for the market to rebound sharply in the second half of 2021 — a recovery that those who waited largely missed.

"You can only see the bottom of the market when it's passed," she said. "The people who chase the bottom of the market, they just kind of shoot themselves in the foot."

Wargent pointed to historical data to make the same case. Australian property downturns have tended to be relatively contained, and the structural forces working against anything more severe remain firmly in place.

"Property downturns in Australia typically last around 9 to 12 months, with price declines averaging about 3 to 4 per cent from peak to trough. While boom periods often last over 3 years, downturns have generally been shorter, often representing periods of stagnation rather than severe crashes."

Pulling against a sharper decline, he noted, are rising construction costs, slow dwelling completions, and a rental market under severe strain, all of which continue to support established home values.

For sellers who need or want to transact now, both agents pointed to the same fundamentals: present well, price realistically, and don't hold out for a number the market won't support.

"Really good properties that have an element of uniqueness always continue to do well," Vandenhurk said. 

"They might not do as well as they would if the market had a bit more certainty behind it, but they still sell. They still have multiple people on them."

A well-prepared, realistically priced home is still a sellable proposition. The market hasn't stopped — it's just become less forgiving of shortcuts.