2025 in review: what to expect in 2026

A year ago, expectations for 2025 were cautious. The RBA was holding, inflation was still above target, and households were under pressure. What actually happened was a more generous year than most economists expected — and one with a sharp twist at the end.

What 2025 delivered

• Three RBA rate cuts between May and November, taking the cash rate from 4.35% to 3.60%.
• Dwelling values up 7.8% nationally, driven by Brisbane (+12%), Perth (+11%) and Adelaide (+10%). Sydney lagged at +5%; Melbourne barely moved.
• Rents up 6%, easing late in the year as new supply came online and migration moderated.
• First-home buyer share recovered to 28% of new loans, helped by the expanded 5% Deposit Scheme.
• Auction clearance rates held above 65% through spring — a sign of genuine buyer demand.

The twist came in February 2026, when the RBA lifted the cash rate 25bps in response to a sticky core inflation print. That move reset expectations for the year ahead.

What we expect in 2026

Cash rate. Likely to hold through Q1, with one more potential rise depending on the next two inflation prints. Markets are pricing in a rate cut by Q4, but this is far from certain. Plan as if rates will stay near current levels for most of the year.

Dwelling values. Slower than 2025. Capital city growth of 3–5% looks realistic; regional markets are more mixed. Brisbane and Perth are still likely outperformers but the easy gains are mostly gone.

Rents. Capping out. Vacancy rates have stabilised in capital cities at around 1.5%. Rental growth slows from 6% to 3–4%.

Lending. Tightening at the margin. APRA's new debt-to-income limits for investors phase in through H1 2026. Owner-occupiers largely unaffected.

First-home buyers. The expanded 5% Deposit Scheme will continue to be the dominant entry mechanism. Income caps under the scheme are likely to rise with wage growth.

What this means for you

• Owner-occupiers: if you fixed in 2023 at 5.5%+, your fixed term is rolling off into a market with similar variable rates. Don't assume the rollover rate from your existing lender is competitive.
• Investors: the gap between your borrowing capacity at different lenders is the widest it's been in three years. Worth reviewing.
• First-home buyers: the price ceiling for the expanded scheme covers a meaningful share of capital city housing. The window is open.

If your last review was more than 12 months ago, it's overdue.