What’s Really Happening in the Australian Property Market in 2026?

Published 8 April 2026

The property market is shifting as we move through 2026. Price growth is slowing, affordability remains stretched, and buyer behaviour is changing. Whether you’re buying your first home, investing, or reviewing your current loan, understanding these trends can help you make smarter decisions.

We’ve broken down the 10 key trends shaping the Australian property market, based on insights from Cotality’s Q1 2026 Housing Update — and what they mean for you.

Trend 1: Price growth is slowing

After a strong run in 2025, the market is entering a more balanced phase. Growth is easing, affordability is tightening, and conditions vary across regions.

Sydney & Melbourne: Prices have largely plateaued since late 2025.
Brisbane & Adelaide: Still growing, but momentum is slowing.
Perth: Continuing strong growth, driven by limited supply.

Property Growth by Australian States in 2026

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Trend 2: Demand is shifting to more affordable properties

Demand hasn’t disappeared — it’s evolving. We’re seeing a clear shift toward more affordable properties, with lower price segments recording stronger growth.

This is being driven by a surge in activity from first home buyers taking advantage of government schemes, alongside investors re-entering the market.

As shown in the graphs below, properties below the price caps are leading the market, with growth significantly outpacing those above the caps across both regional and capital cities.

Property Growth in Australia by city and region

Trend 3: Regional markets are outperforming

Regional areas continue to lead growth, driven by affordability and lifestyle appeal. Many regional markets — particularly in Western Australia and Queensland — are recording strong growth, with some areas achieving double-digit gains.

Top 20 Australian Property Growth Areas 2026.png

Trend 4: First home buyer activity is rising

First home buyer activity has picked up noticeably, particularly following the expansion of the 5% deposit guarantee scheme in late 2025. This led to a strong increase in first home buyer lending, as more buyers were able to enter the market with smaller deposits.

In fact, around 45% of first home buyers are now purchasing with deposits of 10% or less, highlighting a clear shift toward lower-deposit lending. As affordability remains a challenge, most first home buyers are focusing on more affordable properties, which is driving up demand and price growth in the lower end of the market.

Trend 5: Investor activity remains strong

Investor activity continues to be a key driver in the market, now accounting for roughly 40% of new lending — a clear sign of renewed confidence despite higher interest rates.

Rather than chasing high-end capital growth, investors are taking a more strategic approach, focusing on affordability and yield. Key target areas include:

Lower-to-mid price brackets
Properties within or near government scheme price caps
Locations offering stronger rental returns

This strategy closely overlaps with first home buyer activity, increasing competition across the same price segments and placing upward pressure on more affordable properties.

Lending by first home buyer, investors and homeowners.png

Trend 6: Affordability remains stretched

Affordability continues to be one of the biggest challenges in today’s market. Property prices relative to income remain near record highs, with around 45.9% of household income now required to service a new mortgage.

This is being driven by a combination of elevated property values and higher interest rates, which have significantly reduced borrowing capacity compared to previous years.

Trend 7: Mortgage arrears remain low (for now)

Despite the sharp rise in interest rates over the past cycle, mortgage arrears remain relatively low at around 1.5%, indicating that most borrowers are still managing their repayments.

Several factors have helped support this resilience:

Strong employment conditions and income stability
Borrowers building buffers during the low-rate period
Lenders proactively offering hardship support and repayment solutions

However, ongoing cost-of-living pressures, combined with higher mortgage repayments, are starting to place increased strain on households.

Trend 8: Rental market remains tight

Rents are rising again, increasing by approximately 5–6% annually, with many households now spending close to one-third of their income on rent. Vacancy rates remain tight at around 1.5% nationally, well below long-term averages, reflecting an ongoing shortage of available rental stock.

As a result, competition for rentals remains high, placing continued upward pressure on rents. At the same time, stronger rental returns are improving yields, helping to support ongoing investor demand even in a higher interest rate environment.

Trend 9: Total advertised stock levels vary significantly across Australia

The flow of fresh listings has increased in most major cities compared with the same time last year, particularly in Sydney and Melbourne, where current activity is above the five-year average.

In contrast, Perth has experienced a decline in stock levels, down 8.6% year-on-year. This tighter supply has contributed to an uplift in property prices in Perth.

New Sales listing across the state 2026.png

Trend 10: Consumer confidence has dropped

Consumer sentiment has fallen to record lows, reflecting concerns around rising interest rates, inflation, and the cost of living. Historically, weaker confidence tends to slow housing activity, as buyers become more cautious and delay purchases.

While this may temporarily reduce demand, it also presents opportunities for informed buyers and investors who are prepared to act strategically in attractive markets.

The market isn’t crashing — it’s changing.

Opportunities still exist, but they now depend on:

The right strategy
The right timing
The right structure

Whether you’re buying, refinancing, or investing, having a clear plan has never been more important. Book a meeting with our expert team to review your financial position and explore your options.

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