April 2026
Australia’s home prices continued to post overall gains in March, with the mid-tier capitals compensating for slight value declines in Sydney and Melbourne.
Untamed inflationary pressure, compounded by the War in Iran, will create headwinds for home prices in the form of further rate hikes from the Reserve Bank of Australia (RBA). However, investors and developers could still find opportunities for home price growth in the nation’s more affordable regions.
Mid-tier cities lead home price growth
Divergence in the performances of Australia’s multiple housing markets has become further pronounced, with mid-tier capital cities outside the south-eastern coast posting robust gains to drive nationwide growth in dwelling values.
Cotality’s national home value index posted an increase of 0.7 per cent in March, bringing the total increase for the first quarter of 2026 to 2.1 per cent.
The mid-tier cities saw growth of 1.2 per cent or more in month-on-month terms in March, just as Sydney and Melbourne saw declines of 0.1 per cent and 0.2 per cent respectively.
Perth led March gains with a 2.5 per cent increase, followed by Brisbane with a 1.8 per cent gain, Darwin with a 1.6 per cent rise, and Adelaide with growth of 1.2 per cent.
Tim Lawless, Cotality’s research director, highlighted the divergence in home price movements between Australia’s major population centers, with Sydney and Melbourne now struggling to stay afloat.
“Since the end of November 2025, Melbourne values have retreated by -0.9 per cent and the Sydney market is down -0.4 per cent,” Lawless said.
“The softer trend in values coincides with falling auction clearance rates and a pickup in advertised supply, providing buyers with more choice and less urgency at the negotiation table.”
Resurgent inflation puts rate cut hopes on hold
The latest data from the Australian Bureau of Statistics (ABS) points to the persistence of inflationary pressure throughout the economy.
The ABS’ consumer price index (CPI) for the 12 months to February came in at 3.7 per cent. Only slightly below the rate of 3.8 per cent posted in January, and still considerably above the band of 2-3 per cent inflation that is generally preferred by the world’s monetary authorities.
The RBA tends to focus on the trimmed mean CPI as a more reflective measure of inflation. That metric came in at 3.3 per cent for February, also indicating the persistence of robust inflationary pressure.
Sally Tindall, insights director at Canstar, said the latest data makes it almost certain that the RBA will push through with a third rate hike – particularly given the further inflationary impact created by the War in Iran.
“CPI figures offer little reprieve in the fight against inflation,” Tindall said.
“There’s no calm before the storm, but instead, persistent inflation that is set to spike once the Middle East conflict hits next month’s data, just six days out from the RBA’s next meeting.”
A third rate hike would bring the cash rate to its highest level since November 2011, as well as result in a 7.4 per cent increase in the monthly repayments of a typical mortgage borrower.
K-shaped economy means fragmentation in price movements
Persistent inflation and the ensuing raft of rate hikes create major headwinds for Australian property prices by raising the cost of borrowing for homebuyers.
The fundamentals of the Australian housing market nonetheless support further gains in dwelling values, as supply fails to keep pace with demand that continues to rise on the back of strong migration.
One of the results of this is now the huge variation in the health and performance of Australia’s housing markets, both between regions and within regions themselves.
Nerdia Conisbee, chief economist at Ray White, has referred to this divergence in price performance as a “K-Turn” in the housing market, with cities like Perth vastly outpacing Sydney and Melbourne.
While price growth for premium properties has petered out with waning affordability, Australia’s cheaper home markets continue to see robust gains as buyers scramble for deals.
This trend has been further exacerbated by government measures to support first-time homebuyers – such as the expansion of the federal government’s 5 per cent deposit guarantee scheme in October last year, which steps up demand for cheaper properties.
Investors and developers need to keep an eye on this fragmentation of the Australian property market, as it will mean different risks and opportunities for different areas.
Affordable areas within cities could continue to see price gains from new entrants to the property market, even if inflation drives interest rates higher.
In terms of broader regional splits, South Australia continues to show promise as a redoubt of affordable housing, while Melbourne and Darwin have resumed a strong growth trajectory, after previously underperforming compared to Australia’s other capital cities.
Australia’s smaller capital cities have emerged as the clear winners in home price growth since the start of 2026, and they’re playing an outsized role in driving nationwide momentum. At the same time, Sydney and Melbourne continue to face real headwinds as affordability constraints weigh on the country’s two largest markets.
“At CrowdProperty, we’re seeing this play out firsthand – project loan applications and settlements have picked up noticeably in cities like Adelaide, Hobart and Fremantle, where demand remains strong for well-located townhouses and apartments that people genuinely want to live in and can actually afford.
Despite the potential for energy-related inflation and further rate hikes to create near-term challenges, Australian housing prices will continue to find support from the fundamental shortfall of supply relative to demand. That said, investors and developers need to stay keenly aware that this story will play out very differently across Australia’s many regional and sub-regional markets. Understanding the real local dynamics is what separates good projects from great ones – this can vary from street to street.”
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.
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.”
“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.
“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.
