Interest Rate Hikes Expected to Slow Property Price Growth in 2026

What This Means for First-Home Buyers

Interest Rate Increases Poised to Temper Property Price Growth in 2026?w=400

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As 2026 approaches, the Australian property market is expected to experience a slowdown in price growth due to anticipated interest rate hikes.

According to ABC News, Cotality's national Home Value Index rose by 0.8% in January 2026, with mid-sized capital cities leading the gains.

However, the pace of growth is projected to decelerate as the Reserve Bank of Australia (RBA) considers increasing interest rates to address rising inflation.

Tim Lawless, Cotality's research director, noted that the combination of affordability constraints, cost-of-living pressures, and potential interest rate hikes is likely to dampen housing demand. This shift could lead to a more balanced market, offering first-home buyers a respite from the rapid price increases observed in previous years.

For prospective buyers, this environment presents both challenges and opportunities. While higher interest rates may reduce borrowing capacity, the potential stabilization or moderation of property prices could make homeownership more attainable. It's essential for first-home buyers to assess their financial readiness, explore fixed-rate mortgage options to mitigate the impact of rate increases, and stay informed about government assistance programs that can provide additional support.

Engaging with financial advisors and mortgage brokers can offer valuable insights tailored to individual circumstances, helping buyers make informed decisions in a shifting market landscape.

Published:Thursday, 26th Feb 2026
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

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Knowledgebase

Negative Amortization:
A situation in which the loan payment for any period is less than the interest charged over that period, causing the loan balance to increase.