According to Ray White Group Chief Economist Nerida Conisbee in the recently released Property Outlook 2026 Report, expectations for interest rate relief in Australia are diminishing as inflation demonstrates persistent behavior through late 2025.

Key Findings:

Rate Cut Prospects Fade

The optimism surrounding early interest rate cuts has largely evaporated, with Ray White’s analysis indicating that any potential RBA cash rate reduction would likely be delayed until the second half of 2026 at the earliest. This represents a significant shift from earlier market expectations.

The Inflation Challenge

Conisbee identifies the core issue as not isolated data points but rather the broader pattern of inflation behavior across the economy. While goods-related prices have moderated substantially, services inflation—particularly in property-related sectors—remains stubbornly elevated.

The report highlights specific areas of concern:

• Rental costs continuing to rise
• Utilities and insurance premiums increasing
• Labour-intensive services maintaining elevated price growth

These categories are less responsive to interest rate adjustments and reflect deeper structural issues including supply shortages and capacity constraints that concern the Reserve Bank.

Property Market Implications

Construction and Supply Challenges

Ray White’s analysis points to significant ongoing pressures within the property sector itself. Persistent rental inflation signals continued housing supply shortages, while elevated construction and maintenance costs create barriers to bringing new housing stock to market quickly. Despite some early signs of improvement in supply pipelines, the sector continues working through aftereffects of labour shortages, high material costs, and project delays.

Economic Contradictions

The report notes an interesting dichotomy in the broader economy. While several indicators suggest economic cooling—including subdued household spending, mixed business confidence, and softening discretionary sectors—these conditions haven’t been sufficient to trigger monetary policy easing. The Reserve Bank appears committed to prioritizing sustained evidence of inflation returning to its target range before considering rate cuts.

Rate Increase Still Possible

Notably, Ray White’s economists have not completely ruled out the possibility of further rate increases. While described as an unlikely scenario, the persistence of services inflation means this risk remains in the background as policymakers work to prevent inflation from becoming entrenched in the economy.

The Most Likely Scenario

According to the Property Outlook 2026 Report, the most plausible path forward involves an extended period of rates remaining at current levels. Borrowing costs are expected to stay elevated throughout much of 2026, with any potential reduction pushed toward year’s end.

For the property market specifically, this translates to:

• Continued affordability pressures
• Cautious lending practices by financial institutions
• Ongoing reliance on strong population growth as a market driver
• Rental market tightness supporting housing activity

Bottom Line

As Conisbee concludes in the report, while inflation will continue to ease over time, the pace of progress is proving slower than anticipated. This delay is directly shaping the interest rate trajectory and reinforcing the likelihood that 2026 will be another year of “higher-for-longer” mortgage costs before meaningful relief arrives for borrowers.

Source: Ray White Property Outlook 2026 Report, authored by the Ray White Economics Team including Chief Economist Nerida Conisbee, Head of Research Vanessa Rader, and Senior Data Analyst Atom Go Tian.

Summary of Ray White Property Outlook 2026 Report – Prediction 2: Price Growth

Ray White Group Chief Economist Nerida Conisbee predicts that Australian property price growth will continue through 2026 but is expected to moderate by mid-year, according to the firm’s Property Outlook 2026 Report.

Current Market Momentum

Stronger Than Expected Performance

The Australian housing market has entered 2026 with significantly more momentum than most experts anticipated a year ago. Double-digit annual growth has already returned ahead of schedule, driven by a persistent imbalance between supply and demand, renewed confidence in major capital cities, and strong performances across regional and lifestyle markets.

According to Ray White’s analysis, the sustainability of this pace into 2026 depends heavily on two key factors:

• The interest rate trajectory (now looking less favorable for cuts)
• The speed at which construction costs continue to moderate

Broadening Recovery Across Markets

Late Bloomers Join the Upswing

The report notes that through late 2025, the recovery has broadened well beyond early outperformers. Two markets that were initially slow to join the upswing have now firmly entered growth territory:

• Melbourne: Has finally surpassed its previous peak, supported by improving affordability and returning population flows
• Darwin: Experiencing a sharp rebound reflecting chronic listing shortages and high investor demand

These late-cycle improvements, according to Conisbee, highlight a national market that is increasingly synchronized, even though individual city drivers differ.

Premium Market Resurgence

High-End Properties Return to Growth

Ray White’s data shows premium markets have re-entered the growth picture after several years of absence. Key findings include:

• Brisbane: Remains one of the most consistent performers across inner-city markets
• Sydney’s prestige suburbs: Once absent from national growth rankings for several years, now showing meaningful price gains as prestige buyers return following earlier rate cuts
• Perth: Continuing an extraordinary run with suburbs such as Cottesloe-Claremont leading national dollar-value growth for a second consecutive year, underpinned by population inflows and Western Australia’s strong economy

Lifestyle Markets Maintain Strength

Gold Coast Surpasses Sydney in Unit Prices

Perhaps most dramatically, the report highlights the Gold Coast as a standout performer where unit prices have climbed so rapidly they now sit above Sydney’s—a development that would have seemed implausible just a few years ago.

According to Ray White’s analysis, this growth is driven by:

• Strong migration patterns
• Sustained investor activity
• A wave of high-end coastal development

The region is expected to remain undersupplied well into 2026, even as construction costs ease from their peaks.

Affordable Segment Leads Growth

First Home Buyer Scheme Impact

The report identifies the affordable end of the market as likely to remain one of the strongest performers through 2026, supported by the expanded five percent deposit scheme. The removal of income caps and lift in price thresholds have:

• Dramatically broadened buyer eligibility
• Lowered upfront costs for first home buyers
• Created intense demand in the bottom quartile

Ray White’s data shows affordable houses and units are consistently outpacing the wider market across most cities. In regional Queensland, affordable homes are recording annual growth as high as 13.8 percent, underscoring the intense competition created when incentives collide with limited supply.

While Treasury modeling estimates only a modest long-term price impact, the near-term effects are heavily concentrated at the entry level where stock is already scarce and demographic demand strongest.

The Interest Rate Wildcard

Biggest Variable Remains RBA Policy

Conisbee identifies the timing of rate cuts as the biggest wildcard for 2026. Labour market strength has complicated the outlook, delaying expectations even as other economic sectors soften:

• Retail spending remains weak
• Small-business credit stress is building
• Consumer sentiment remains mixed

However, the most decisive shift is occurring in the construction sector, where cooling activity, shrinking pipelines, and easing wage pressures suggest a major inflation driver is unwinding—a key reason the path to lower rates remains open, though unlikely in the first half of 2026.

Ray White’s Price Growth Outlook

Moderation Expected by Mid-Year

The report’s key predictions for 2026:

“We are likely to move beyond the double-digit phase by mid-2026 unless a rate cut arrives earlier than expected.”

If Rate Cuts Arrive Early: The combination of lower borrowing costs, improving construction conditions, and persistent supply shortages could easily re-accelerate prices.

Without Rate Cuts: The market will continue to grow, just at a steadier and more sustainable pace.

Overall Assessment: Fundamentals point to another year of solid but more moderate growth compared to 2025’s double-digit performance.

Source: Ray White Property Outlook 2026 Report – “Price growth to continue but moderate by mid-year” by Nerida Conisbee, Ray White Group Chief Economist

You’re our finance expert when it comes to supporting the Rochelle Adgo team and Ray White Mitchelton.  We’ve got some pretty big changes starting to happen, January-February. Take us through that and what it looks like.

Definitely Rochelle. Well, I guess just before Christmas we’ve had some major updates from the government with two major changes. One, the Help to Buy Scheme, which is a First Home Buyer incentive helping people get into the market sooner, is live from the 5th of December. Which is where the government’s going to own 30 to 40% of your property depending on if you’re buying something established or brand new.

The more major one that’s come through is APRA, as of the 1st of February 2026, is putting a blanket wide rule across the market with all lenders included, capping the debt-to-income ratio to six times your income. Obviously, that’s more going to be affecting investors leveraging that high, uh, high end of that debt-to-income ratio.

They’re borrowing their equity. And current- you know, currently at the moment it’s 8 to 9 times, and that’s now going to be capped at around about 6. And then it’s going to be seen as high risk.