March 2026
The Reserve Bank of Australia’s (RBA) decision to hike interest rates last month did little to slow the momentum of the housing market in many parts of the country, with mid-sized capitals still posting robust price gains.
Further cuts from the RBA are anticipated however, which could slow – although not completely stymie – nationwide growth in dwelling values in 2026.
Australia divided into two-track housing market
Australia’s housing market continued to post gains in February, with Cotality’s National Home Value Index (HVI) seeing an increase of 0.8 per cent.
The pace of gains in dwelling values was sharply divided, however, with Australia splitting into two broad segments in terms of growth rates.
The two largest Australia cities of Sydney and Melbourne have seen growth in home prices stall completely, yet other capital cities outside of the south-eastern coast continue to see healthy increases.
Perth led growth in home values with a 2.3 per cent rise in February, while Brisbane, Adelaide and Hobart all posted gains of over 1 per cent.
Tim Lawless, Vitality’s research director, said these cities were set to see further gains on the back of low home inventories.
“The clear slowdown in housing conditions across Sydney and Melbourne could signal an easing in growth conditions elsewhere down the track, but for now, the mid-sized capitals continue to see support from extremely low inventory levels, which is boosting the growth in values,” Lawless said.
RBA expected to hike further
February’s home price gains arrived just as the RBA resumed a hawkish trajectory, announcing a hike of 25 basis points that brought its cash rate target to 3.85%.
The RBA’s board cited concerns over the pick up in inflation since the start of 2026, projecting that it will remain above the 2 – 3 per cent target range for some time to come.
The war in Iran and an abrupt uptick in oil prices further compounded the RBA’s concerns, with its board deciding to implement another hike of 25 basis points in March that took the cash rate to 4.1%.
As with other major asset classes, the upcoming performance of housing prices hinges heavily upon the future decisions of the RBA.
RBA governor Michele Bullock has warned of the possibility that a recession could be the byproduct of efforts to contain inflation, while government modelling indicates that inflation could become much stickier as a result of the rise in oil prices.
Given the fundamentals of the Australian housing market, even hawkish monetary policy won’t be enough to stymie upward pressure on dwelling values. It will, however, dial back the pace of growth compared to 2025.
Melbourne seen as new hub of opportunity
Melbourne stands apart from Australia’s other major cities with its recent sluggish growth in dwelling values.
Victoria’s tax regime is seen as holding back home prices, with the state government levying some of Australia’s highest stamp duties.
Anne Flaherty, senior economist with realestate.com.au, said that Victorian property owners pay the highest taxes in Australia, serving as a major disincentive for housing purchases.
The ongoing underperformance of Melbourne housing prices could soon make the city one of the most appealing destinations for residential investor demand in Australia, however. This is especially the case given breakneck price growth in other major cities which is severely hampering affordability.
“Melbourne’s now the cheapest capital city behind Hobart and Darwin,” Flaherty said. “So a lot of investors are thinking, ‘Yes, the tax disincentives are real, but Melbourne’s never been cheaper than Adelaide or Perth or Brisbane.”
Home prices in Melbourne are on track to also find support from strong fundamentals. Government forecasts point to Melbourne seeing some of Australia’s strongest urban population growth, with expectations of a 1.5 percent increase per annum for the next decade.
At the same time, building approvals and housing starts have dived in Victoria, with developers deterred by the state’s onerous tax regime.
Flaherty expects this to create a “dire shortage of housing” over the long-term, which will reverse Melbourne’s status as an underperforming market and cause investors to “come flooding back.”
[CrowdProperty quote]
“While inflation remains a concern for the Australian economy and future hikes from the RBA will create headwinds for real estate, the fundamentals of the housing market are such that further gains in home prices are almost inevitable.”
“This is highly evident in Melbourne, where the supply of new housing will fail to keep pace with growth in demand as the city’s population continues to readily expand.”
“When looking at different regions of Australia for opportunities, developers should really keep their eyes on demographic factors, as well as the regulatory considerations that could affect housing supply.”
If you have a property project and you are looking for an experienced finance debt partner to help you get off the ground, then reach out to our expert property team at CrowdProperty.
CrowdProperty provides fast, simple and transparent property project finance for property professionals, learn more.
Opinions or views expressed represent the thoughts of individuals and not those of CrowdProperty or Quay.
February 2026
Australia’s housing prices continued to edge higher in December and January, on the back of momentum created by government policies to support new homebuyers.
The Australian housing market is expected to see more robust gains in 2026 despite worsening affordability and the Reserve Bank of Australia’s (RBA) hawkish turn, due to the prevailing imbalance between supply and demand.
December home prices continue to rise
Cotality’s national Home Value Index posted a rise of 0.6 percent in December, for its smallest increase in five months. Growth rebounded slightly since the start of the year, rising to 0.8 percent in January,
Sydney and Melbourne weighed considerably on the tepid growth of home prices at the end of last year, with both cities posting declines in dwelling values of -0.1 percent in December.
They continued to hold back headline numbers in January, with gains of 0.2 percent in Sydney and 0.1 percent in Melbourne.
In spite of softer growth towards the end of the year,, the Home Value Index saw an increase of 8.6 percent in 2025. This was its strongest calendar year increase since 2021, when low interest rates and policy support to deal with the Covid pandemic boosted prices by 24.5 percent.
Tim Lawless, Cotality’s research director, said the supply-demand mismatch is a key driver of ongoing home price gains, despite affordability challenges and the RBA’s withdrawal from a cycle of rate cuts.
“Despite the most unaffordable conditions on record in many cities, along with a rebound in cost of living pressures, we are still seeing a broad-based rise in housing values,” he said.
“The ongoing capital gains reflect persistently low inventory in the face of above average housing demand.”
Housing market to stay buoyant in 2026
On 3 February, the RBA brought an end to its rates cutting cycle, with its board announcing a 25 basis point increase to the cash rate target to 3.85 percent.
Despite major concerns surrounding the impact of the RBA’s hawkish turn on mortgage borrowers, leading economists still believe that Australian housing values are on track for further gains in 2026.
KPMG forecasts that home prices will increase 7.7 percent in 2026, driven primarily by the ongoing shortfall in supply for houses relative to demand.
Dr Brendan Rynne, KPMG chief economist, said the upward pressure on property prices created by this supply-demand mismatch is being further exacerbated by government policies to support home buyers.
These policies – such as the 5 percent Deposit Scheme – are overcoming the headwinds to further price gains created by worsening affordability and higher interest rates.
“Despite the fact that there aren’t enough houses being built, buyers in these cities are prepared to pay more than the supply shortage would justify,” Rynn said.”
“As a result, at the entry level, the market will continue outperforming this year, with more young people seizing the opportunity to break the rent cycle and lock in their first home sooner, intensify competition at the affordable end and ensuring prices remain firm.”
KPMG sees Perth leading home price gains in 2026, with a projected rise of 12.8 percent. Brisbane and Darwin are also forecast to see robust increases of 10.9 percent and 10.5 percent respectively.
The consultancy sees home price growth in Sydney and Melbourne at far lower, yet still robust levels, of 5.8 percent and 6.8 percent respectively.
[CrowdProperty quote: “Worsening affordability and rate hikes from the RBA won’t be enough to dampen price growth on the housing market.
“Supply still falls much too short of demand, with little chance of improvement on the horizon.]
Opportunities in remaining affordable urban areas
John Lindeman, CEO, Property Power Partners, expects first home buyers to play a key role in driving opportunities in the property market in 2026, thanks to the 5 percent deposit scheme.
This means an influx of demand into those key urban locations that still remain affordable despite the Covid-era home price boom.
“First home buyer numbers are surging,” Lindeman said. “The Federal Government’s 5 percent deposit scheme has launched thousands of first home buyers into the market.
“Investor numbers are also increasing, and both of these groups are concentrating demand into the most affordable locations.
“This is having the greatest impact in Sydney and Melbourne, where demand from
both investors and first home buyers is pushing up prices in the most affordable suburbs.”
What does this mean for SME Property developers?
There is certainly an optimistic demand story in 2026 — prices rising, first home buyers will be more active thanks to the 5 percent deposit scheme, and a persistent supply shortage. But for SME developers starting a project today, the opportunity is real but uneven. Where you build, what you build, and when you lock in your contractor matters enormously.
David Ingram from CrowdProperty says that he not only sees end values rising, but so are our developers build costs, approval timelines, and financing costs (the RBA just hiked to 3.85 percent). “Margin compression is a genuine risk if feasibility isn’t stress-tested carefully.”
Backed by institutional capital, CrowdProperty has recently expanded it’s offering to WA with a number of projects about launch in the West. This appears to be a standout market with local developers seeing “the end values and rents in Perth are now rising faster than the cost to construct and deliver for the first time in living memory” which is a genuinely good scenario for infill property developers. Perth leads capital city forecasts with house prices expected to rise nearly 13 percent and units by 11.6 percent in 2026, driven by the fastest population growth in the country and very limited housing supply.
If you have a property project and you are looking for an experienced finance debt partner to help you get off the ground, then reach out to our expert property team at CrowdProperty.
CrowdProperty provides fast, simple and transparent property project finance for property professionals, learn more.
Opinions or views expressed represent the thoughts of individuals and not those of CrowdProperty or Cache.
January 2026
Australia’s housing market ended 2025 on a softer note, with Cotality’s national Home Value Index rising 0.7% in December — the smallest monthly gain in five months. While values continued to edge higher nationally, momentum clearly eased, with Sydney and Melbourne recording month-on-month declines of –0.1%. These two markets became the biggest drag on headline growth.
This marked the first monthly decline across Australia’s two largest cities since January last year, prior to the rate cuts that commenced in February. Every other capital city and broad rest-of-state region recorded price growth in December, although most markets experienced some cooling as 2026 approached.
Inflation has eased — but cost pressures remain
Australia’s inflation narrative has shifted, but for SME property developers, it hasn’t gone away.
Headline CPI has eased from the extremes of recent years, yet the cost pressures that directly affect development feasibility remain embedded. Construction, labour, insurance, compliance, and finance costs are all operating off a materially higher base than pre-2020 norms.
As we move into 2026, CPI is no longer the shock factor. Instead, it has become the baseline reality shaping how projects are structured, funded, and delivered.
Interest rate uncertainty weighs on confidence
According to Cotality Research Director Tim Lawless, the December result points to a shift in sentiment rather than a sudden deterioration in fundamentals.
CrowdProperty CEO David Ingram says this “translates into a market where borrowing costs remain higher for longer, holding costs are a material profit variable, and time delays directly erode developers’ margins.”
In this environment, the cheapest loan is often not the most effective. Certainty, speed, and alignment with project goals carry real financial value.
Renewed speculation that the rate-cutting cycle may be over — and that the next move from the RBA could be a hike — has dented housing confidence. A “higher for longer” interest-rate environment, combined with persistent cost-of-living pressures and worsening affordability, appears to be taking some heat out of buyer demand.
This uncertainty is likely to shape housing conditions in early 2026, particularly in highly leveraged and higher-priced segments of the market.
A strong finish to 2025 despite softer momentum
Despite the slower December outcome, 2025 was a strong year for Australian housing overall.
Nationally, dwelling values rose 8.6% over the calendar year, adding approximately $71,400 to the median dwelling value. This marked the strongest annual gain since 2021, when emergency-low interest rates drove a 24.5% surge in values.
Every capital city and rest-of-state region recorded growth over the year, with outcomes ranging from Darwin’s 18.9% increase to a more modest 4.8% gain in Melbourne. The market enters 2026 from a position of strength — albeit with momentum moderating.
Affordability shifts demand toward lower price points
One of the most consistent themes through 2025 has been the underperformance of the upper quartile of the market.
In December:
- Upper-quartile dwelling values rose just 0.2%
- Lower-quartile and middle-market values increased 1.1%
SME developers are increasingly prioritising smaller, repeatable products, reducing design and delivery complexity, and compressing construction and settlement timelines.
This trend has played out across every capital city. In NSW, we are starting to see the adoption of pattern books, with more than 21,000 patterns sold over the past six months at $1 each, and eight projects commencing construction in more affordable metropolitan suburbs.
Regional markets continue to outperform
Regional housing markets have remained more resilient than those in capital cities, even as growth moderated towards the end of the year.
Monthly growth across combined regional markets slowed from 1.2% in November to 1.0% in December — still double the pace of capital city growth (0.5%). Over the full year, regional values rose 9.7%, outperforming the 8.2% increase across combined capitals.
Regional Western Australia (+16.1%) and regional Queensland (+12.6%) led the way, while regional Victoria recorded the softest annual growth at 6.0%.
What this means for SME property developers
December’s CPI data points to a market that is cooling at the margin — not reversing.
Construction costs, including labour, professional services, materials, and holding costs, are stabilising but not falling. Inflation has lifted the overall cost base, raising the bar for what constitutes a viable development project.
The upside is improved predictability: while margins remain tighter, developers can now plan with greater confidence, provided feasibility assumptions are disciplined.
CrowdProperty Property Director Brian Cullen notes that “with costs remaining higher and feasibility margins thinner, errors are more expensive, and conservative assumptions matter more than ever.”
For SME property developers, the implications are clear:
- Attainable housing remains the strongest and most resilient demand segment
- Feasibility discipline is critical, particularly around pricing, contingencies, and exit strategies
- Location and local supply dynamics matter more than national averages
Importantly, while market sentiment may soften into early 2026, a material uplift in housing supply remains unlikely. This should help cushion downside risks to values, particularly in undersupplied sub-markets.
Ultimately, success in 2026 will be defined not by speculation but by conservative feasibility, realistic pricing, intelligent funding structures, and efficient project delivery.
Final thoughts: entering 2026 with discipline
Australia’s housing market is entering 2026 in a more measured phase following a strong 2025. The market continues to reward well-located, realistically priced, and feasible projects. For SME developers, the right funding structures are increasingly important.
At CrowdProperty, our expert team is proud to support developer clients through a changing market. This year, we will be further supported through our alliance with Aura Real Estate Credit, part of the Aura Group, enabling us to fund more new development projects as the market transitions into its next phase.
CrowdProperty provides fast, simple and transparent property project finance for property professionals, learn more.
Opinions or views expressed represent the thoughts of individuals and not those of CrowdProperty or Cache.
