Market Trends
January 2026 Market Smart:
Resilience Despite Headwinds
Australian housing values rose 0.8% in January – a subtle acceleration from December’s 0.7%, defying record affordability pressures, renewed cost-of-living concerns, and looming rate hike fears. Sydney and Melbourne barely budged, while Perth, Brisbane, and Darwin continued their strong runs. With every capital and regional market recording gains, the housing market is proving more resilient than expected. But momentum is moderating, and demand-side headwinds are set to intensify through 2026, making selective, data-driven investment more critical than ever.
Key Take Aways
Sydney and Melbourne stall
Sydney rose just 0.2% and Melbourne 0.1% in January – both still below their peaks and lagging well behind mid-sized capitals.
Perth leads again
Perth gained 2.0% in January and 18.5% annually, cementing its position as the nation’s strongest-performing capital city market.
Darwin dominates
Darwin delivered 19.7% annual growth, the highest of any capital, driven by ultra-tight supply and strong interstate migration.
Lower quartile drives growth
Lower quartile house values rose 1.3% across capitals versus just 0.3% at the upper end, as affordability deflects demand downward.
Rental pressure intensifies
Rents rose 5.4% annually with vacancy at 1.7% – still well below the long-run average – pushing more renters toward ownership.
Outlook: cautious but supported
While demand-side headwinds are mounting, structural undersupply and a resilient labour market continue to underpin values.
Cotality 2026
Two-speed market persists
Sydney and Melbourne remain the laggards, posting marginal gains of 0.2% and 0.1% respectively. Both cities sit below their peak values – Sydney -0.1% from November 2025, Melbourne -0.7% from March 2022. Meanwhile, Perth surged 2.0%, Brisbane 1.6%, and Adelaide 1.2%. Darwin led nationally with 1.5% monthly growth, taking its annual gain to 19.7%. The divergence is clear: buyers are prioritising affordability and yield over prestige, and the data reflects it.
Cotality 2026
Regional strength continues
Regional markets outpaced capitals again, rising 1.0% in January versus 0.7% for capitals. Regional WA posted the strongest annual growth at 17.3%, followed by regional QLD at 13.0% and regional SA at 11.9%. Listings in January were 19% below last year and 25% below the five-year average, while sales volumes remained 2.7% above last year. The supply-demand imbalance in regional Australia remains acute, supporting continued price growth even as broader momentum eases.
Cotality 2026
Rents climb, vacancy stays tight
National rents rose 0.6% in January – the strongest monthly increase since April 2025 – with annual growth accelerating to 5.4%. The vacancy rate lifted slightly to 1.7%, up from 1.5% in September, but remains well below the long-run average of 2.5%. Adelaide posted the tightest conditions at just 1.0% vacancy. Over five years, rents nationally have surged 42.4%, adding approximately $204 per week to the median. For many renters, the additional cost of servicing a mortgage versus paying rent is narrowing, nudging more toward ownership where possible.
Things To Keep An Eye On
Rate hike risk escalates – With inflation above target and a potential RBA hike as soon as February, confidence has taken a hit and borrowing costs could rise sharply. APRA’s DTI limits take effect – From February 1, limits on high debt-to-income lending are in place, setting a more cautious tone for credit through 2026.
Supply remains structurally tight – listings are 25% below the five-year average, and construction costs remain elevated, keeping supply well below underlying demand.
