Australian property prices have entered 2026 at record levels, setting the scene for tougher borrowing conversations as the Reserve Bank’s February meeting approaches.
National home values rose 0.2% in January and now sit 8.4% higher than a year earlier, lifting the median price to just over $880,000. While some smaller capitals and regional markets are still climbing, signs of fatigue are emerging in the larger east‑coast cities – a key consideration for mortgage brokers managing borrower expectations.
“Sydney and Melbourne have seen home price growth soften in recent months," said Angus Moore (pictured), REA Group senior economist. "Melbourne has posted three months of modest declines, and while Sydney prices were up in January, they are below their recent peak. Ample choice for buyers in these cities throughout spring has likely contributed to the softer price growth.”
Adelaide remains the standout capital, with prices jumping 0.9% in January and surging 13.8% over the year. Brisbane and Perth also continued to post solid gains of 0.4% and 0.3% respectively, supported by tight stock levels.
“In contrast, Brisbane, Perth, and Adelaide have continued to see strong growth, outperforming the larger capitals amid very limited choice for buyers,” Moore said.
“Price growth in 2025 was supported by three rate cuts, but a rate rise at the Reserve Bank’s February meeting is now looking likely, with inflation coming in stronger than expected in the second half of 2025,” Moore said.
With unemployment still low and new housing supply constrained, brokers may need to stress‑test higher rates, revisit borrowing limits and coach clients on buffers as the market edges toward “new highs in 2026, but at a slower pace of growth than in 2025,” with KPMG now forecasting a 7.7% national house‑price gain despite stretched affordability and renewed rate‑hike risk at the RBA’s 2–3 February meeting.
Beyond the near‑term rate outlook, brokers are also contending with a structurally undersupplied market. Recent projections suggest Australian homes are on track for a six‑figure price jump over the next five years, with construction potentially falling 462,000 dwellings short of the National Housing Accord goal of 1.2 million new homes by mid‑2029, after only 193,000 approvals in the most recent year.
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