Insurance insights

10 insights into the investment property market

Each month we pull together 10 insights impacting the investment property market. Read on for this month’s instalment.

1. RBA increases interest rates. The Reserve Bank of Australia raised the cash rate by 0.25 percentage points in response to inflation risks and expectations, driven by global increases in energy prices. Ray White’s Chief Economist notes that by acting early, the RBA aims to reduce the risk of the temporary energy price increases translating into sustained inflation across the economy.
2. Aus well placed to absorb uncertainty. The RBA notes borrowers are generally well placed to weather cost pressures, and while the auction market has seen a softening, bidder numbers and clearance rates remain steady. This is supported by historical data that shows the Australian housing market absorbs uncertainty through lower volumes, not prices.
3. Rental affordability has worsened again. The latest Rental Affordability Index by realestate.com.au shows prospective renters are facing the worst affordability on record since the Index began in 2008. It measures the share of advertised rentals that households across the income distribution can afford, based on a household spending 25% of pre-tax income on rent. Over the July – December 2025 period, a typical household earning $124,000 AUD could afford 37% of rentals, less than half of what is available.
4. New builds impacted by raising fuel prices. Australia’s residential building industry is facing emergency fuel levies from suppliers in response to surging fuel prices, due to the war in the Middle East. It is expected that these emergency levies will impact fixed-price contracts. While the latest Cotality Cordell Construction Cost Index saw construction prices up 1% nationwide during the December quarter, Cotality is expecting new price hikes to show in the Q2 April Index.
5. Housing prices recorded strong growth. The Real Estate Institute of Australia released its Real Estate Market Facts for the December 25 quarter. The national median rose 4% over the quarter, with all capital cities recording gains. Domain’s recent Profit and Loss Report 2026 shows home owners continue to make profit during sales, ‘with 97.5% of house resales and 88.3% of unit resales delivering a profit,’ with Perth and Brisbane recording some of the highest success rates nationally.
6. National vacancy rates fall to 1.1%. Vacancy rates fell in Sydney, Darwin, Canberra, Brisbane and Melbourne, with Adelaide and Perth holding steady and Hobart increasing slightly.
7. Rent growth continues post pandemic. Year on year growth in rents (Dec 2024 – 2025) has increased by almost 5%, slowing from the 7% growth in 2024, and 10+% growth in 2023 and 2022. Following years of rapid growth, the average advertised rent has surged from $420 in 2020 to $650 in 2026 – an increase of 55%.
8. Mortgage repayments now rival rents in some capital cities. Cotatlity reports inner Melbourne as “one of the few markets where mortgage repayments on the median unit are estimated to be around $322 per month lower than the equivalent median rent.”
9. Are first home buyer grants still fit for purpose? A new white paper from PRD unpacks the effectiveness of First Home Owner Grants, finding that while they increase first-home buyer participation in the short term, they contribute to price inflation, heightened borrowing levels and worsening affordability over time. Read the report.
10. TAS and WA to increase supply. Tasmania is increasing the maximum size of granny flats to boost housing support and options for renters, and WA has expanded its stamp duty concession scheme to address ongoing housing supply.

BONUS INSIGHT: NSW mandates price guides

The NSW Government introduced legislation to protect buyers from underquoting. Sellers now must disclose mandated prices or price guides with listings to reduce underquoting and increase transparency.

*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are here, contact 1800 661 662 if you have any questions.