By Graeme Salt
The property market enters 2026 in a state of confusion, with many would-be buyers unsure where prices are heading.
Over 2025, home prices rose by 8.6 per cent last year to a median of $991,331 after three Reserve Bank rate cuts boosted borrowing capacity, but the pace of monthly growth slowed to just 0.7 per cent in December.
And in December 2025, Sydney and Melbourne saw a modest drop of 0.1 per cent – auguring a quieter start to 2026.
The main reason why experts are expecting a quieter start to 2026 is that economists are increasingly pessimistic on interest rates – inflation unexpectedly shot up to 3.8 per cent in October, prompting many to predict the Reserve Bank would be obliged to increase rates.
But here is where it gets messy – in a recent survey by the Australian Financial Review forecasters are split three ways over the outlook for the year: nine analysts expect a cut by year-end, 13 have forecast a hike, and 16 believe rates would not move at all.
It’s hard to have confidence in the property market if we don’t know how much the loan will cost!
Despite this, Australian dwelling prices are forecast to rise six per cent to 10 per cent in 2026, according to SQM Research’s Housing Boom and Bust Report.
The report points to another year of growth across all capital cities, supported by steady demand and the momentum carried over from 2025’s monetary easing.
So, it looks like we are in for a few confusing months, but the long-term future looks rosy.
Things for you to consider
If you are thinking of buying but have been nervous of the runaway prices we saw in 2025, the early part of 2026 may be good for you – we are likely to see hesitancy for other would-be buyers.
Most mortgages are taken out on a 30-year basis, in the long-run, a few months of interest rate turbulence wont matter so long as you can make the monthly mortgage payments.
To prepare yourself for possible (but not guaranteed) rate rises, you may want to talk to your broker about fixing your loan. There are good-and-bad sides of doing this, but it may give you peace-of-mind going forward.
Graeme Salt is an award-winning mortgage broker. For a no-obligations consultation of your home loan needs, please contact him on 02 9922 5055.
