As we move through the middle of 2026, Australia’s property market finds itself at an interesting crossroads.
The Reserve Bank of Australia (RBA) has elected to leave the cash rate unchanged at 4.35% following its June meeting, providing some welcome certainty after three rate increases earlier in the year. While the decision doesn’t remove affordability challenges entirely, it does offer buyers, sellers and investors a clearer picture of the environment they are operating in for the months ahead.
At the same time, the latest figures from Cotality show that Australia’s housing market remains remarkably resilient. Home values are still sitting above year-ago levels, rental markets remain exceptionally tight and transaction activity continues to track above long-term averages. However, the pace of growth is becoming more measured in many markets, creating what many would describe as a more balanced environment than the rapid growth cycles experienced in recent years.
So what does the latest data tell us, and what might come next for Australian property?
A Market That Continues to Hold Up
Despite higher borrowing costs and ongoing cost-of-living pressures, Australian property values have continued to demonstrate strength.
According to Cotality, national dwelling values increased 2.1% over the March quarter and were 9.9% higher over the year to March 2026, representing the fastest annual rate of growth since mid-2022. Australia’s total residential real estate market value has also climbed to approximately $12.6 trillion.
These figures reinforce a key theme that has defined the market throughout 2025 and into 2026: demand continues to exceed supply in many parts of the country.
Population growth, limited housing availability and ongoing rental shortages have continued to underpin market conditions, even as higher interest rates have reduced borrowing capacity for some buyers.
The Pace of Growth Is Becoming More Balanced
While values continue to rise nationally, one of the more important stories emerging from the latest data is that growth is no longer occurring at the same speed everywhere.
Cotality notes a growing divergence between markets, with some locations continuing to record strong value growth while others are experiencing a more moderate trajectory. Rolling four-week growth rates have softened in both Sydney and Melbourne, while some of the smaller capitals have also begun to lose momentum after exceptionally strong performances in recent years.
This is not necessarily a negative development.
In many respects, slower growth can create a healthier market environment by reducing urgency and allowing buyers and sellers to make more considered decisions.
Rather than the highly competitive conditions that characterised parts of the market over recent years, many locations are now seeing a more balanced relationship between supply and demand.
Regional Markets Continue to Show Resilience
One of the most consistent themes in recent housing data has been the resilience of regional Australia.
According to Cotality, regional markets continue to benefit from affordability advantages and ongoing migration trends that have supported housing demand outside the major capital cities.
Many regional centres have continued to attract buyers seeking lifestyle benefits, affordability and employment opportunities associated with infrastructure investment, healthcare expansion, logistics growth and decentralised economic activity.
For investors, regional markets also continue to offer an attractive combination of rental demand and comparatively stronger yields in many locations.
While every regional market behaves differently, the broader trend suggests regional Australia remains an important contributor to national housing market performance.
Supply Remains a Critical Issue
Perhaps the most important factor underpinning Australia’s housing market continues to be supply.
The latest Cotality analysis highlights the significant imbalance that has emerged between population growth and dwelling completions in several states.
Queensland and Western Australia have experienced particularly strong population growth while new housing construction has struggled to keep pace. This mismatch has contributed to sustained upward pressure on property values in markets such as Brisbane and Perth.
At a national level, listing activity also remains relatively subdued.
New listings over the four weeks to early April were down 3.3% compared to the same time last year, indicating many property owners continue to hold rather than sell.
Until housing supply improves meaningfully, this lack of available stock is likely to continue providing support for property values across many parts of the country.
Rental Markets Remain Exceptionally Tight
For investors, rental conditions remain one of the strongest aspects of the current market.
Cotality reports that the national rental vacancy rate sat at just 1.6% in March, highlighting the ongoing shortage of available rental accommodation. Gross rental yields nationally increased to 3.57%, with some markets offering substantially higher returns.
These conditions continue to support investor interest, particularly in regional markets and locations where rental demand remains elevated.
Strong rental demand is also helping offset some of the impact of higher borrowing costs for property investors.
What Does the RBA’s Decision Mean for Property?
The RBA’s decision to leave the cash rate unchanged at 4.35% provides a degree of stability for the housing market after a period of renewed tightening. The Board acknowledged that inflation remains above target but also noted that financial conditions have already tightened significantly following this year’s earlier rate increases.
For property buyers and sellers, the key takeaway is certainty.
While the RBA has made it clear that further rate increases remain possible if inflation pressures persist, the decision to pause allows households and markets time to absorb previous increases.
Importantly, a hold in rates often provides confidence to buyers who may have been waiting for greater clarity around borrowing costs.
It also gives lenders, borrowers and investors a more stable environment in which to plan.
What Happens Next?
Looking ahead, the property market is likely to remain highly localised.
Markets with strong population growth, constrained housing supply and healthy employment conditions are expected to remain relatively well supported.
At the same time, higher borrowing costs are likely to continue moderating growth in some locations, particularly where affordability has become stretched.
Rather than a single national story, Australia’s property market is increasingly becoming a collection of individual local markets, each responding differently to economic conditions, housing supply and buyer demand.
For buyers, this may create opportunities that were less available during the peak growth periods of recent years.
For sellers, demand remains present, particularly for well-presented properties in desirable locations.
For investors, tight rental conditions continue to provide strong underlying support.
The Outlook for the Second Half of 2026
While uncertainty always remains, several positives continue to underpin the Australian property market.
- Home values remain higher than they were a year ago.
- Rental demand remains exceptionally strong.
- Supply shortages persist in many markets.
- Population growth continues to support housing demand.
And importantly, the RBA’s latest decision has provided a period of stability after a series of rate increases.
The pace of growth may not be as rapid as it has been in recent years, but that moderation is helping create a more balanced marketplace.
As Australia moves through the second half of 2026, the housing market appears to be transitioning from a period of rapid acceleration towards a more sustainable phase of growth, one that may offer opportunities for buyers, sellers and investors alike.
Need some professional advice? Contact an Elders Expert in your area here.