While 2025 saw a strong run of monthly gains in property prices and an annual growth of 7.5% year on year (above the decade average of 5.4% per annum), figures slowed in November, with growth of 1% month on month. That’s likely to continue this year, with price growth slowing to around 5%–7%. There are a few factors at play, including the anticipated Reserve Bank of Australia (RBA) rate hikes, poor affordability and the onset of macroprudential controls.

Coming into effect in February, the Australian Prudential Regulation Authority is imposing new limits on bank lending. The changes mean banks can issue no more than 20% of loans above six times a borrower’s income, a pre-emptive response to cool riskier forms of lending. While this will affect investors more than owner-occupiers, its impact will initially be minimal, with the aggregate ratio currently well below the 20% cap.

Conversely, the expanded 5% Deposit Scheme, a new Help to Buy Scheme, an ongoing housing shortfall, as well as improved consumer confidence, may contribute to further growth, particularly in the boom cities of Perth, Brisbane and Adelaide. The RBA rate decisions will be focal – cuts could lead to an upswing in prices, while hikes might see strong early growth ease towards the end of the year.

Real estate remains a key financial strategy for wealth creation. While volatility is typically more visible in share markets, cycles are an inherent part of all financial markets. If you’re looking to invest, or worried about your current assets, we can provide tailored financial advice to ensure you stay on track towards your financial goals.

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General Advice Warning:

The information in this blog is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider whether the information is appropriate for you and seek professional advice before making any financial decisions.
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