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RBA holds rates, but opportunities for investors remain
Although the Reserve Bank of Australia (RBA) has held the cash rate steady, experts say that the property market will remain competitive for investors, with moderate, sustained returns expected through 2026 and beyond.
Despite three rate cuts earlier in 2025, the RBA has held the cash rate at 3.60 per cent, following persistent inflation, which has continued to weigh on buyer confidence and pushed auction clearance rates to yearly lows.
RBA Governor Michele Bullock said the board's decision was unanimous, remaining cautious until its outlook on the data evolves.
“Recent data suggest the risks to inflation have tilted to the upside, but it will take a little longer to assess the persistence of inflationary pressures,” Bullock said.
While the board excluded a rate cut, it said that a rise could be in the cards next year, but the decision would be made on a meeting-by-meeting basis.
"I don't think there are interest rate cuts on the horizon for the foreseeable future. The question is, is it just an extended hold from here, or is it the possibility of a rate rise?”
"I couldn't put a probability on those, but I think they're the two things that the board will be looking closely at coming into the new year,” Bullock said.
While borrowers won’t see further mortgage relief for a while, experts have said that both sellers and buyers will see the market stabilise, giving them room to breathe as property price hikes will lose momentum.
REA Group senior economist Eleanor Creagh said the cash rate hold was expected, with the RBA remaining cautious amid stronger-than-anticipated inflation.
She said that while the central bank will need to see clear evidence before applying another cut, this year’s 0.75-point decline has boosted borrowing capacity and fuelled a rebound in home prices.
“Earlier cuts and stronger confidence continue to support buyer demand, aided by population inflows and the expansion of the Home Guarantee Scheme. With new supply constrained, these factors will keep upward pressure on prices throughout the summer.”
While demand will continue to add to market competition, Creagh said property prices will lose momentum and remain moderate in 2026.
She said the trend was already emerging, with November's monthly growth easing to 0.5 per cent nationwide, reflecting slower gains across the capitals despite an annual rise of 8.7 per cent, the fastest since mid-2022.
“With interest rates now expected to remain on hold for an extended period, affordability constraints are likely to see price growth moderate throughout 2026,” Creagh said.
LJ Hooker head of research and business intelligence, Mathew Tiller, said that steady rates will keep market confidence high, pushing sellers who have been holding off to finally list their property.
“While many people would like a rate reduction to help household budgets, especially at this time of the year, the upside is that steady interest rates should keep buyer demand ticking over without lighting another rapid price surge,” he said.
“More sellers are likely to come to the market in 2026, so listings should lift from very low levels, and that will also assist in taking some heat out of the market.”
Tiller said that while listings have remained tight in many areas, especially family-friendly suburbs, sellers deciding to launch their campaigns in the new year could capitalise on rising holiday-driven demand.
“People have time off work, they’re relaxed and have time to reassess their lifestyle, and that includes looking at property,” Tiller said.
“There are often fewer competing properties in early January, so it can be a good time to test the market.”
Additionally, Tiller said the investor market would remain highly competitive, as a tight rental market and low construction levels would keep rents and dwelling values growing.
“Looking to 2026, we expect buyer demand to remain elevated, and it’s likely even with more homes coming on the market, prices will continue to rise, but at a more measured pace.”
Property prices to rise by over 100k by 2027
Despite property values expected to grow moderately in 2026, experts have forecast that house prices will increase by an extra 100k by 2027.
According to a Canstar analysis of Westpac’s data via Cotality, five of the six major capitals analysed would have median house prices exceeding $1 million, up from only two currently.
Data forecast showed that Perth is expected to deliver the strongest gains through to the end of 2027, with the Westpac economic team forecasting dwelling price increases of 8 per cent in 2026, and 6 per cent in 2027.
For houses specifically, it would raise Perth’s median by $134,221, bringing it to $1,090,053 by the end of 2027.
Property price prediction showed that Sydney’s median house price could hit $1.7 million in just over two years, representing an increase of $117,874.
Brisbane would remain Australia’s second most expensive capital city, with a median forecasted house price of $1,229,445 in 2027, adding an extra $118,014 from today’s price.
According to the forecast, Hobart would be one of the only capital cities to remain below the 1 million mark in 2027, with a predicted median house price of $798,930.
Canstar.com.au data insights director, Sally Tindall, said that while forecasts won’t always come true, they still point to another two years of solid gains in markets where demand outstrips supply.
“Great for anyone buying now; if it materialises, however, for those struggling to get into the market, it’s yet another reminder of how far the goalposts can move.”
“A rate hike in 2026 could well pour some cold water on the property market; however, it’s unlikely to be enough to see prices fall. Unless we see a meaningful uptick in supply or a significant shift in economic conditions, the market is likely to keep marching higher,” Tindall concluded.
