February 2026 Westpac Housing Market Update

In February 2026, the Australian housing market faced a new challenge with unexpected rate hikes, causing concerns about the outlook for the real estate sector in the country. The shift in interest rate expectations from a gradual easing to a sudden re-tightening has impacted buyer sentiment, especially among the most affordability-sensitive owner-occupier segments.

Despite this, house price expectations have reached new cycle highs, and unemployment expectations have slightly improved, likely due to positive signals about the economy. Consumer risk aversion remains relatively unchanged. Overall, housing-related sentiment still leans towards the positive, albeit at a softer level.

The full effects of the Reserve Bank of Australia’s (RBA) change in monetary policy are yet to be fully realized. The 25 basis point rate hike in February is anticipated to be followed by another hike in the first half of the year, with a cautious pause thereafter. This uncertainty around future policy decisions is expected to weigh on homebuyer sentiment. Consumer views on prices, jobs, and risk may also be influenced by any cooling in the housing market and the broader economy.

Nevertheless, some housing markets show resilience, particularly in areas with tight supply like Brisbane, Adelaide, and Perth, where price gains continue to be robust. The limited availability of properties and stretched affordability in these markets could lead to sustained price increases. While overall growth in prices, turnover, and new dwelling approvals may slow down in 2026, the changes are expected to be minor.

The key factors influencing the housing market in the near future will be inflation trends and the RBA’s response to economic conditions. These elements will continue to drive market activity in 2026 and beyond. Despite the challenges posed by rate hikes and potential market cooling, certain regions in Australia show promise for sustained growth due to supply constraints and strong demand. Overall, the housing market is expected to navigate the changes with a cautious eye on inflation and monetary policy adjustments.