Catenaa, Monday, January 12, 2026- The Australian housing market is showing signs of slowing as fears of interest rate rises temper buyer activity, with prices stalling in major capitals including Sydney and Melbourne.
PropTrack’s December Home Price Index reported a 0.1% rise in dwelling values, the slowest monthly growth in nearly a year. Despite strong gains in 2025, the median price of a capital city home now sits around $1 million.
Price growth earlier in 2025 was supported by three Reserve Bank of Australia (RBA) cash rate cuts, which boosted buyer confidence.
Higher-than-expected inflation in November diminished prospects for further cuts and raised the likelihood of rate increases in early 2026.
Experts say the market is expected to grow around 5% nationally in 2026, slower than last year, while sustained price falls are unlikely due to persistent housing shortages and ongoing migration.
Smaller capitals saw better momentum, with Adelaide recording 0.8% growth in December, and Brisbane and Perth averaging 0.5%.
In contrast, Sydney and Melbourne prices fell 0.3%, while Canberra saw a 0.2% decline. Affordable properties remain in demand, particularly those eligible for government support under the First Home Guarantee Scheme, which continues to stimulate buyer interest at the lower end of the market.
Auctioneers report that higher-end buyers are exercising caution amid potential rate hikes, while competition persists for moderately priced homes.
Analysts note that limited new housing supply and government programs are likely to prevent a broad market decline, keeping price growth modest but steady across much of the country.((https://www.realestate.com.au/news/australian-home-prices-stall-as-interest-rate-fears-rack-markets/))
