Australian Property Market Outlook for 2026 (Updated)

The RBA's unexpected rate hike in February 2026 has reshaped the property market outlook. Here's what industry experts are now predicting.

Interest Rate Reality Check

After three rate cuts in 2025, the RBA surprised markets by raising rates in February 2026:

• Current cash rate: 3.85% (as of February 2026)
• NAB prediction: Another hike to 4.10% possible in May 2026
• Other banks: Watching inflation data closely before forecasting

This represents a reversal from the easing cycle many expected would continue. Now may be a good time to reassess whether fixed or variable rates make sense for your situation.

Property Price Forecasts (Revised)

Higher rates may moderate growth expectations, but fundamentals remain strong. For a deep dive into how property values and ownership costs are projected to grow to 2035, see our inflation analysis:

• Sydney: 3-5% growth (revised down from 5-7%)
• Melbourne: 2-4% growth (revised down from 4-6%)
• Brisbane: 4-6% growth (still leading)
• Perth: 4-6% growth
• Adelaide: 3-5% growth

First Home Buyer Activity

Despite higher rates, government incentives continue to support first home buyers. The First Home Guarantee scheme now offers 50,000 places annually with the $1.5M price cap in Sydney, helping buyers enter the market with smaller deposits.

Higher rates do reduce borrowing capacity by 2-3%, so check your updated borrowing power.

Refinancing Still Makes Sense

Even with rates rising, refinancing can still save you money if you're on an uncompetitive rate. Many borrowers are paying the "loyalty tax": 0.5% to 1% higher than what their bank offers new customers.

Check your potential savings with our refinancing calculator.

What This Means For You

The rate hike doesn't mean you should abandon your property goals, but it does mean being more strategic. Book a free consultation to discuss how to navigate this changing environment.