2026 Property Update: Key Insights and What Lies Ahead

At first glance, everything looks fine – prices are up and headlines are positive. But markets don’t turn when things look broken. They turn when the signals quietly change. And that shift is already underway.

The Market Hasn’t Broken…But It Has Turned

If 2025 was about momentum, 2026 is about friction.

Prices are still rising:

• +2.1% over the March quarter
• +9.9% annually

But here’s the shift: Growth is slowing, and more importantly – confidence is starting to wobble.

Oxford sums it up well:

Price growth is expected to flatten under the weight of borrowing costs, with near-term momentum fading quickly.

This is not a crash story. It’s a transition story.

Download the Oxford Economics Report to access the full insights.

What the Charts Are Telling Us (and what matters)

Growth is still there – but uneven

From the Cotality data:

• Regionals: +3.3% quarterly
• Capitals: +1.8% quarterly

At the same time:

• Perth: +24.3% annually
• Brisbane: +19%
• Melbourne: +3.4%

This is now a location-driven market.

Oxford reinforces this:

• Mid-sized markets still holding, but slowing
• Sydney & Melbourne are already losing momentum

Momentum is fading everywhere

The rolling growth charts show:

• Every capital is losing speed
• Sydney & Melbourne already flat to negative short-term

Oxford calls this clearly:

“A clear turning point is in play… lead indicators are weakening.”

Translation: The market hasn’t stopped – but it’s running out of steam.

Rates are now doing damage

Cash rate: 4.1% and rising

Borrowing capacity down ~7% from recent hikes

Oxford view:

• Another hike likely
• Real wages negative
• Confidence weakening

This is the key shift: Rates are no longer a background issue – they are actively shaping demand.

Supply is still the anchor

Despite softer demand:

• Listings are down double digits
• Stock levels well below average

And structurally:

• Australia is short ~150,000 dwellings

This is why prices aren’t falling: Demand is soft…but supply is worse.

The Big Shift: From Momentum Market → Selection Market

This is the part most people miss.

We’ve moved from:

“From ‘everything goes up’ to ‘some things go up… some don’t.’”

Oxford highlights:

• Upper-end markets under pressure
• Lower-priced stock holding up better

We’re also seeing:

• Units outperforming houses (affordability trade-down)
• First home buyers active due to policy support
• Investors becoming more selective

For brokers: The deal quality matters more than ever.

Demand Is Changing Shape: Investors are still active – but cautious

Investor lending surged (~30%+ annually)

But facing:

• Higher rates
• Possible tax changes (negative gearing / CGT)

First home buyers are propping up the lower end

• Government schemes driving demand
• Concentrated around price caps
• Supporting units and entry-level housing

Net effect: A two-speed market is forming.

Rental Market: The Safety Net

• Vacancy: ~1.6% (tight)
• Rental growth: ~5–6% annually

Oxford adds:

• Rents to grow ~6% in FY2026
• Then moderate but remain strong

This matters because: Rental pressure is keeping investors in the game and putting a floor under prices

What Happens Next (This is the important bit)

Short Term (next 6–18 months)

Oxford forecast:

• Flat to slightly negative quarters ahead
• Growth slowing to ~0.5% in FY2027

What that looks like in real life:

• Buyers pushing back
• More negotiation
• Longer selling times

Medium Term (2027–2029)

This is where it flips again:

• Rate cuts expected from early 2028
• Growth returns above 6% annually

Why?

• Pent-up demand
• Chronic undersupply
• Population growth

Same fundamentals – just delayed.

The Risk Factors (Don’t ignore these)

Oxford flags three big ones:

1. More rate hikes
2. Geopolitical shocks (inflation pressure)
3. Tax changes to investors

Worst case:

• Prices could fall -3% to -5% temporarily

Not catastrophic – but enough to change behaviour.

What This Means for Brokers

This is where you lean in.

This is no longer a “volume game”

• Clients need guidance, not just approvals

Conversations need to shift

From: “How much can I borrow?”
To: “What and where should I buy?”

Expect more complex deals

• Borrowing capacity tight
• Clients stretching
• More structuring required

Investors are still key – but more selective

• Yield matters again
• Risk conversations matter more

The opportunity is still there…but it’s different:

Less about timing the market, more about choosing the right asset in the right location

Bottom Line

The property market in 2026 is not breaking.

But it is:

• Slowing
• Fragmenting
• Becoming more complex

And that’s exactly where brokers win – because in this kind of market, advice matters more than ever.