Australia’s housing market closed out 2025 on a strong note, but the latest Cotality Monthly Housing Chart Pack (January 2026) shows momentum is beginning to cool as affordability pressures, interest rate uncertainty and tighter lending settings come into play.

For home buyers, refinancers and investors, this shift matters. Here’s what the latest data reveals — and what it means for your next property or loan decision.

Home prices are still rising — but more slowly

National dwelling values rose 8.6% over 2025, marking one of the strongest calendar years for housing growth in the past decade. However, quarterly growth slowed to 2.9% in the final quarter, signalling that price acceleration is easing.

While all capital cities recorded gains over the year, performance varied widely:

• Darwin, Perth and Brisbane led the market with double-digit growth
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• Sydney and Melbourne showed clear signs of slowing, with values flat to slightly negative at the end of the year
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• Lower-priced homes outperformed, as affordability pressures pushed buyers towards cheaper segments
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City highlights (annual growth):

• Darwin: +18.9% (strongest growth)
• Perth: +15.9%
• Brisbane: +14.5%
• Melbourne: +4.8% (weakest capital city performance)
• Sydney: +5.8%

This divergence highlights a key theme heading into 2026: price growth is becoming more selective, rather than broad-based.

Housing Market 2026: Affordability is shaping buyer behaviour

One of the most notable trends is the strong performance of lower-priced homes. Entry-level and more affordable properties recorded significantly faster growth than premium housing.

This reflects:

• Higher interest rates limiting borrowing capacity
• First-home buyers and upgraders prioritising affordability
• Increased competition for well-priced properties

For buyers, this means being strategic about price points is more important than ever. For refinancers, it reinforces the value of securing a sharper rate to protect household cash flow.

Listings remain tight, keeping pressure on prices

Despite softer price momentum, housing supply remains constrained:

• Total listings are more than 20% below the five-year average
• Properties continue to sell quickly, particularly in capital cities
• Sellers still hold the advantage in most markets

Low supply has helped prevent sharper price falls, even as buyer confidence softened late in 2025. This imbalance is likely to continue supporting prices into 2026 — especially in markets with strong population growth.

Listings, sales & competition

• National home sales rose 4.9% in 2025, driven primarily by regional markets (+8.1%) rather than capitals (+3.2%) .
• Total listings remain tight, sitting:
  • 15.8% lower than a year ago
  • 20.6% below the five-year average, reinforcing seller-favourable conditions .
• Auction clearance rates fell from a September peak of 72% to ~57% by mid-December, signalling easing price pressure and buyer resistance .

Auction results show demand is easing

Auction clearance rates peaked in spring 2025 before trending lower into December. By the end of the year, clearance rates had fallen below long-term averages.

This doesn’t signal a downturn — but it does show buyers are becoming:

• More price-sensitive
• Less willing to overpay
• More selective in competitive markets

For buyers, this creates better negotiating conditions than seen earlier in the cycle.

Rents are still rising, but yields are shrinking

Rental conditions remain tight across Australia:

• National rents rose 5.2% in 2025
• Vacancy rates tightened further to around 1.7% from 2.1%
• Every capital city and regional market recorded rent growth

However, rental yields have continued to compress, falling to around 3.6% nationally, as property values have risen faster than rents.

This means investors are increasingly focused on:

• Cash flow efficiency
• Interest rates and loan structure
• Long-term growth rather than short-term yield

Investor lending is surging

One of the strongest signals in the data is the resurgence of investors:

• Investor lending jumped sharply through 2025
• Investors now account for over 40.6% of new mortgage lending, the highest share in nearly a decade
• Investor demand is strongest in NSW, ACT, Victoria and Queensland

This renewed investor activity has helped support prices — but it may also attract closer scrutiny from regulators.

Interest rates and lending rules will matter in 2026

The Reserve Bank ended 2025 holding the cash rate at 3.60%, but with a more hawkish tone due to stubborn inflation.

At the same time:

• Average variable mortgage rates eased slightly late in the year
• APRA announced tighter lending rules, including limits on high debt-to-income loans from February 2026

Together, these factors suggest credit growth may slow, even if rates stabilise.

What this Housing Data means for Australians 2026

As the housing market transitions from rapid growth to a more balanced phase, choosing the right home loan becomes even more important.

For borrowers:

• A small rate difference can have a big impact on affordability
• Refinancing could unlock significant savings
• Cashback and low-rate offers may offset slower price growth

For investors:

• Loan structure, interest type and cash flow matter more than headline yields
• Comparing investor-specific rates is essential as margins widen

Bottom line

Australia’s housing market remains resilient, but 2026 is shaping up as a more disciplined, rate-sensitive environment.

Price growth is slowing, supply is still tight, investors are active, and lending rules are tightening. In this market, the smartest move isn’t rushing — it’s comparing.

👉 RateBuster helps you compare home loans, refinance options and cashback offers so you can make confident decisions in a changing market.