After a year of soaring prices and fierce competition, Australia’s housing market is finally slowing down. The latest data shows a clear easing in price growth as buyers hesitate, costs stay high, and affordability remains out of reach for many. It’s not a collapse — more like a deep breath after a long sprint.
A Housing Market Catching Its Breath
The newest figures from CoreLogic’s national home value index show property prices rising by 0.4% in December, the smallest monthly increase since late 2022. Over the course of 2025, prices still climbed about 7%, but momentum clearly faded toward the year’s end.
While Sydney and Brisbane managed modest gains, Melbourne and Hobart slipped slightly. Regional areas held steady, showing that demand for lifestyle properties and relative affordability is still strong outside the capital cities.
The slower pace reflects a market adjusting to the limits of what buyers can handle. Higher borrowing costs, tight household budgets, and a sense that prices can’t keep climbing forever have all cooled enthusiasm.
Interest Rates Still Shaping the Market
With the Reserve Bank of Australia’s cash rate sitting at 4.35%, the impact of earlier rate hikes continues to ripple through the economy, explains ABC News. Many homeowners are still adjusting to larger mortgage repayments, while potential buyers find it harder to secure loans big enough to enter the market.
Even with inflation easing, the pressure on household finances is unmistakable. The outlook for 2026 depends largely on what happens next with interest rates. Some economists think the RBA could start cutting later this year, but that would depend on further signs of cooling inflation and slower spending.
Until then, the housing market remains in a holding pattern — not falling, but no longer racing ahead either.
Uneven Growth Across the Country
The national figures hide sharp differences between cities. Sydney’s median house price is still well above $1.4 million, while Adelaide and Perth continue to perform strongly thanks to limited housing supply and solid local demand.
At the same time, first-home buyers remain squeezed out in most major cities. The balance between supply and demand continues to favour sellers, even though competition has softened slightly.
Looking Ahead to 2026
Most analysts agree that this year will likely bring stability rather than a correction. Tight supply, steady population growth, and ongoing construction challenges are expected to prevent major price drops.
For sellers, the boom-time urgency may be gone, replaced by longer listing periods and more realistic offers. For buyers, there’s finally a hint of breathing room — though affordability remains a huge obstacle.
After years of relentless growth, Australia’s property market appears to have hit a natural pause. The frenzy has faded, replaced by quieter confidence, cautious optimism, and a sense that maybe, just maybe, balance could be returning.
