State of the Market – WINTER 2026
Just when you thought property had consumed its quota of media headlines, the government and inflation weighed in, ensuring Australian real estate has remained top of mind over the past couple of months.
Over Autumn, we’ve seen inflation remain stubbornly high, further interest rate rises, the continuation of conflict in Middle East and those resulting increases in oil prices, and then of course there were some interesting budget announcements aimed squarely at property.
So where does that position Australia’s property market as we head into winter 2026? Let’s dive on in…
Federal budget
The biggest news in real estate over recent months was of course the Federal Budget, which proposed some significant changes to tax policy relating to property.
Most notable are the changes to capital gains tax, whereby the discount applied to future capital gains on investments will move from a flat 50 per cent to cumulative inflation over the holding period.
In addition, there is to be an overhaul to negative gearing, which has been a topic that’s been on and off the table for a number of years now.
In a nutshell, the Albanese government has decided owners of rental properties purchased after budget night 2026 (May 12) will not be able to claim property net losses against other income such as wages.
Just to clarify, there is a ‘grandfathering’ period on both these announcements. As mentioned, the changes to negative gearing only impact investment properties purchased after May 12, 2026, while capital gains accrued prior to July 1, 2027 will continue to receive the existing 50 per cent discount under transitional arrangements.
So what’s the thinking behind this?
Ultimately, it’s to make housing more affordable, with Westpac noting “the overarching goal is to shift the balance from house purchase as a pathway to wealth-creation back towards home ownership”.
Meanwhile, Treasury says the reforms “will help level the playing field for first home buyers, preserve the gains investors have made, and support investment in new housing supply”.
The bigger question is, will it work? And that remains to be seen. Government policy is just one of a number of factors at play in a housing market that underpins much of Australia’s existing wealth.
Interest rates
But it’s not just government announcements impacting the housing market, with the Reserve Bank of Australia announcing three cash rate increases this year before keeping rates on hold at the recent June meeting.
Each increase not only hits the hip pocket of mortgage holders, it also impacts the borrowing ability of buyers, meaning their available budget is smaller every time interest rates rise.
After consecutive 25 basis points increases in February, March and May, the cash rate is now at 4.35 per cent in a bid to tackle inflation that is stubbornly remaining above the target range of 2-3 per cent.
At its most recent meeting on June 16, the RBA board adopted a wait and see approach, explaining the impact of the three cash rate increases this year is still yet to take full effect, although the economy does seem to be slowing.
In the meantime, there has also been the welcome news of easing tensions in the Middle East which is already seeing pressure on oil prices reduce.
Housing values
As of June 2026, Australian residential real estate was valued at $12.6 trillion, with 55.8 per cent of the nation’s wealth tied up in housing.
And yes, the value of property is still increasing, albeit at a slower rate than in previous years.
Cotality reports that in the 12 months to May, every capital and regional area had seen increases in housing values, with dwelling values up 8.8 per cent nationally.
Interestingly, in most states it was regional areas leading the charge, with the combined regions up 11.8 per cent in the 12 months to May, while the capitals were up 7.8 per cent.
That said, the most pronounced increase was Perth, where values increased 25.8 per cent.
Meanwhile, the latest data from the Australian Bureau of Statistics indicates NSW has the highest mean dwelling price at $1,324,800, followed by Queensland at $1,123,700 and Western Australia ($1,103,500). The Northern Territory maintains the lowest mean price at $597,300.
Graph courtesy of Cotality
Listing volumes
Across the capitals, the number of properties for sale is 7.4 per cent higher than this time last year, according to Cotality’s data.
In the 28 days to June 14, there were 79,510 properties for sale nationally.
The biggest annual increase in listings was in Brisbane which rose 13.6 per cent, while the greatest decrease was Hobart where listings are down 20.1 per cent on the year prior.
Listings – 12-month change
Sydney – up 9.3 per cent
Melbourne – up 6.7 per cent
Brisbane – up 13.6 per cent
Adelaide – up 8 per cent
Perth – up 1.3 per cent
Hobart – down 20.1 per cent
Darwin – down 7.4 per cent
Canberra – up 9 per cent
Combined capitals – up 7.4 per cent
Clearance rate
The capital city auction clearance rate remains at its lowest level since the early months of the Covid pandemic, with the preliminary clearance rate for the week of June 14 sitting at 54 per cent.
Cotality notes this is a modest step up from the 51.1 per cent seen the week prior, and marks the third consecutive week where the preliminary auction success rate held below 55 per cent.
There has been much debate as to whether the declining clearance rate is connected with the Federal Government’s budget announcements regarding capital gains and negative gearing, but Cotality research director Tim Lawless told the ABC the market was already cooling before Budget night.
The takeaway? Maybe we’re seeing steam continue to come out of the auction market as buyers near their budget thresholds and those capital city price increases stabilise a little.
Graph courtesy of Cotality
The rental market
It probably comes as no surprise that the rental vacancy rate remains tight, and as of May 2026 is sitting at 1.2 per cent, according to data from SQM Research.
That rate is the same as last year, but an improvement on March this year when the rate dropped to an alarming 1 per cent.
While all capitals remain well below the balanced market level, some capitals offer greater choice for renters than others. At the moment, Darwin has the lowest vacancy rate at just 0.3 per cent, while Canberra and Melbourne have the highest at 1.6 per cent.
As a result of limited supply, renters aren’t just struggling to find a property, they are also facing increased affordability issues, with asking rents now 7.8 per cent higher nationally than they were a year ago.
SQM reports the national combined rent average now stands at $700.04 per week, while the capital city average has increased to $797.37 per week, supported by ongoing growth across most capital cities.
Darwin leads the surge in pricing with rents up 14 per cent on this time last year, and 5.1 per cent on the month prior.
And when it comes to where you’re likely to spend the most per week in rent, it is of course Sydney where the combined rental price for houses and units now averages $919.65, while the most affordable rental properties can be found in Hobart where the combined average is $612.49.
The takeaway
As we head into winter, Australia’s property market remains remarkably resilient despite a challenging economic backdrop.
Interest rates are higher, inflation remains stubborn, and proposed tax reforms have created fresh uncertainty for investors. Yet housing values continue to rise, rental demand remains intense, and property continues to represent one of the nation’s most significant stores of wealth.
The reality is that there is no single factor driving the market. Interest rates, government policy, population growth, housing supply, consumer confidence and local economic conditions are all influencing outcomes in different ways across the country.
For buyers, sellers and investors alike, the key will be staying informed and focusing on long-term goals rather than short-term headlines. While the market may be moving at a more measured pace than in recent years, opportunities still exist for those who understand their local area and make decisions based on strategy rather than sentiment.
