Australian Property Market Update February 2026

0:00Welcome back to another deep dive. Um,

0:02we are thrilled to have you sitting at

0:03the table with us today. Whether you are

0:06prepping for a major economic strategy

0:08meeting, uh, trying to decide if it is

0:10finally the right moment to buy, sell,

0:12or rent,

0:13or if you’re simply someone who wants to

0:15understand the invisible forces shaping

0:17the world around you, you are in exactly

0:19the right place.

0:19Yeah, we are talking directly to you

0:21today. The person who wants the hard

0:22facts, the nuance, and, you know, none

0:24of the fluff. We have a massive mission

0:26ahead of us. Today we are cracking open

0:29the brand new, highly anticipated

0:32totality monthly housing chart pack for

0:34February 2026

0:36and it is a phenomenal just incredibly

0:39dense data set. Um what we have sitting

0:41in front of us is essentially a real

0:43time MRI of the Australian property

0:45market.

0:46Right. Our goal for this deep dive is to

0:47cut right through the towering stacks of

0:49economic data, the complex trend lines,

0:52and the endless percentages to figure

0:54out what is actually happening on the

0:55ground

0:55because there’s a lot of noise out there

0:57right now.

0:58Exactly. More importantly, we’re going

0:59to break down the mechanics of why these

1:01shifts are occurring and uh how they

1:04dictate your everyday life and your

1:06financial future.

1:07And to set the stage for you, I want to

1:09start with a number that genuinely

1:10stopped me in my tracks when I was

1:12reading through the executive summary.

1:14Um, when we talk about Australian

1:16residential real estate right now, we

1:18are talking about an asset class that

1:20has ballooned to a valuation of 12.4

1:23trillion.

1:24Yeah,

1:24that is trillion with a T. We’re talking

1:27about 11.4 million individual dwellings

1:30carrying something like 2.5 trillion in

1:33outstanding mortgage debt. It is almost

1:35impossible for the human brain to

1:37conceptualize a number that massive in a

1:39vacuum.

1:39It really is. You do need a benchmark to

1:42grasp the sheer gravity of 12.4 4

1:44trillion. Let’s put it into context with

1:46the rest of the Australian economy.

1:48Please do because I was struggling.

1:49If we connect this to the bigger

1:50picture, consider the entirety of

1:52Australian superenuation. The combined

1:55retirement savings of the entire nation

1:57currently sits at $4.5 trillion.

1:59Okay, so 4.5 trillion for all of our

2:01retirement.

2:02Right now look at the stock market. All

2:04of the listed stocks on the Australian

2:05exchange combined are worth 3.7

2:08trillion. Residential real estate

2:10utterly dwarfs both of those massive

2:12pillars of the economy combined.

2:14Not even close.

2:15Not even close. This single asset class

2:18now holds 55.4%

2:20of all Australian household wealth.

2:22Over half of the nation’s total wealth

2:24is tied up in bricks, mortar, and land.

2:26Okay, let’s unpack this because if over

2:28half of our collective financial weight

2:30is resting on housing, we need to know

2:32exactly which direction those property

2:33values are moving.

2:34We do. Looking at the headline figures

2:36on the front page, the market overall is

2:38still pushing upward. I saw the national

2:41home values grew by a pretty staggering

2:43amount over the 12 months to January

2:452026, uh, marking the fastest annual

2:47pace since early 2024. But as I read

2:50further into the report, it felt like

2:52that big headline number was hiding a

2:54much more complicated, almost

2:55contradictory reality on the ground.

2:57It absolutely is. That headline number

2:59you’re looking at is 9.4% national

3:02growth over the past year. It looks

3:04massive on paper, but you are spotting

3:06the exact nuance that matters. That

3:09annual figure is a bit of a rear view

3:11mirror metric.

3:12How so?

3:12Well, it tells us where we have been,

3:14not necessarily where we are going. When

3:16you look closer at the more recent data,

3:19specifically the rolling quarterly

3:21change. The overall market is actually

3:23slowing down. In fact, the most recent

3:263-month period marked the smallest

3:28rolling quarterly change since August

3:302025.

3:30Wait, let me stop you there for a

3:32second. a rolling quarterly change. For

3:34anyone listening who usually glazes over

3:36when economists start throwing around

3:38terms like that, how should we visualize

3:40what that actually measures?

3:41Sure. Picture taking a snapshot of

3:43property values today and comparing it

3:45to exactly 3 months ago.

3:47Okay.

3:47Then tomorrow you do the same thing for

3:49the 3 month prior to tomorrow. It gives

3:51you a smooth continuous look at

3:53short-term momentum rather than waiting

3:55for a whole year to pass.

3:56Ah, I see. So it smooths out the bumps.

3:58Exactly. And that short-term momentum is

4:00decelerating. The pace of capital gains

4:02is slowing down. But the key takeaway

4:04from the totality data is that it is

4:05doing so incredibly unevenly. We are

4:08firmly in what the data describes as a

4:10twospeed market dynamic.

4:12A two-speed market. I was looking at the

4:14breakdown city by city and it looks like

4:16a tale of two entirely different

4:17countries. I expected the heavyweight

4:19Sydney and Melbourne to be leading the

4:21charge, but their charts look almost

4:23completely frozen compared to the rest

4:25of the country. Frozen is a great word

4:27to describe the larger capitals right

4:28now. Let’s look at the numbers. Over the

4:30last quarter, Sydney and Melbourne saw

4:32their value growth slow to a crawl, just

4:34bor.1% to 2% growth.

4:37It’s practically zero.

4:39Yes, Sydney is hovering just a fraction

4:41below its record high from November

4:432025. Melbourne is actually going

4:45backwards slightly. It is currently a 7%

4:48below the record high it set way back in

4:50March 2022.

4:51Wow. 2022. And Hobart is struggling even

4:54more, sitting 5.1% below its own 2022

4:58peak.

4:58Make that make sense for me. If the

5:01whole country is operating under the

5:02same broader economic conditions, how

5:05can the biggest cities stall out while

5:07other places are acting like they’re in

5:09the middle of a gold rush? Because the

5:10midsize capitals are telling a

5:12completely different story.

5:13What’s fascinating here is the stark

5:15contrast when you shift your focus away

5:17from the eastern seabboard and look at

5:19cities like Brisbane, Adelaide, and

5:21especially Perth.

5:23They are surging.

5:24Surging is putting it mildly,

5:26right? If we look at the monthly gains

5:27just for January, Brisbane jumped 1.6%,

5:31Adelaide rose 1.2% and Perth shot up by

5:332.0% in a single month. Perth is the

5:37runaway train of this entire data set.

5:39I saw that chart. It’s basically a

5:40vertical line.

5:41Over the past 12 months, dwelling values

5:43there have skyrocketed by 18.5%.

5:45Brisbane is up 15.7%. These midsize

5:48capitals are sitting at absolute record

5:50highs.

5:51But why? What’s driving that specific

5:53divergence?

5:54The reason behind this divergence comes

5:56down to affordability ceilings and

5:57inventory. The sheer cost of entering

6:00the Sydney or Melbourne market has hit a

6:03hard limit for many buyers, especially

6:05with borrowing costs where they are

6:06today. Buyers are being priced out and

6:09are turning their attention to markets

6:10with lower entry points.

6:12So, they’re looking west or looking

6:13north.

6:14Exactly. And when you combine that

6:16intense concentrated demand with an

6:19absolute drought of available homes for

6:21sale in those midsize cities, you get

6:24explosive price growth.

6:26That brings up the piece of the puzzle I

6:27genuinely couldn’t wrap my head around.

6:29If prices are this high and growth is

6:31surging in these midsize cities, where

6:34is the supply? Why aren’t people putting

6:37for sale signs on their longs to cash

6:39in?

6:39It’s a massive paradox.

6:41We have a massive paradox in the data.

6:43On one side of the ledger, people are

6:45actively buying. The volume of home

6:46sales actually went up over the past

6:48year. But on the other side, the flow of

6:50newly advertised listings coming onto

6:52the market was down compared to the same

6:54time last year.

6:55Let’s quantify that paradox. National

6:57sales volumes went up by 4.1% over the

7:00year, largely driven by a 7.0% spike in

7:04regional sales. People are eager to buy,

7:06but the flow of new listings dropped by

7:085.2% compared to a year ago. So, more

7:11people buying, fewer people selling.

7:13It is a classic inventory crisis. You

7:15have higher purchasing activity running

7:17headfirst into a scenario where fewer

7:19current owners are willing to list their

7:21homes. When you have more inventory

7:23going out the door than coming in, the

7:25total pool drains rapidly.

7:27How low is the pool right now?

7:28Right now, total national listings are

7:30sitting at just 105,525

7:33dwellings. That is a 17.8% drop from

7:36where we were a year ago. And the

7:38extremes in this inventory data are just

7:40wild. If you are listening to this right

7:41now and trying to buy a house in Perth,

7:44the data confirms that you are not

7:45crazy. There’s literally nothing to buy.

7:47Nothing. Perth’s total listings have

7:49plummeted by 36.9% compared to last

7:51year. It is a true supply drought.

7:53But what is a 37% drop in listings

7:56actually feel like for a buyer trying to

7:57navigate this market?

7:58The data paints a picture of a high

8:00pressure, incredibly stressful,

8:02fastmoving environment. Homes are

8:05selling significantly faster. Across the

8:07capital cities, homes are spending a

8:09median of just 26 days on the market.

8:12That’s less than a month.

8:13It is 5 days faster than at the same

8:15time last year. And in Perth, homes are

8:18practically flying out the door with

8:20median days on market at a blistering 15

8:24days.

8:2515 days. You barely have time to get the

8:27building inspection done. You’re

8:29practically throwing your life savings

8:30at a house you’ve only seen for 15

8:32minutes during a chaotic Saturday open

8:35home.

8:35It’s frantic.

8:36And I imagine buyers don’t have much

8:38room to negotiate when the turnaround is

8:40that fast.

8:40They have almost zero leverage. We can

8:42see this in a metric called the median

8:44vendor discount,

8:45which is what

8:46it tracks how much sellers are dropping

8:48their original asking price to reach a

8:50deal. That discount is holding

8:52incredibly tight at just minus 2.9%

8:54across the capitals. Sellers simply

8:57aren’t budging. Why would they?

8:58Exactly. They know that if you try to

9:01haggle, there are three other people

9:03right behind you ready to pay full

9:04price. The environment remains heavily

9:07weighted in favor of the seller,

9:09particularly in those low inventory

9:11areas.

9:11Here’s where it gets really interesting,

9:13though. With prices hitting record highs

9:15in these midsize cities and the overall

9:18cost of living dominating the news every

9:20single day, who exactly has the capital

9:23to keep buying all this real estate?

9:25That’s a great question. We dive into

9:27the finance and lending section of this

9:29report and it reveals a massive plot

9:31twist. I saw the total value of new home

9:34loan commitments over the September

9:36quarter and I had to read the number

9:38twice.

9:39You are referring to the 98 billion

9:41figure.

9:42Yes.

9:42Over a single quarter, new residential

9:44mortgage commitments hit 98 billion. It

9:47is the highest level on record.

9:48Unbelievable.

9:49And looking at the composition of those

9:50loans perfectly answers your question

9:52about who is doing the buying. It is not

9:54the first home buyers. know they’re

9:56getting squeezed out.

9:57The share of new owner occupier lending

9:59going to first home buyers actually

10:01trended lower down to 28.3%.

10:04The driving force behind this

10:05record-breaking lending volume is

10:07investors.

10:08Investors.

10:09The total value of investor lending

10:11surged 17.6% over the quarter.

10:14So investors now account for 40.6% of

10:17the total value of new loan commitments.

10:19Yeah, that was the highest level we have

10:20seen since late 2016 and it is miles

10:24above the decade average of 33.4%.

10:26It’s a flood.

10:27Investors are absolutely flooding into

10:29the market. But why? This is where the

10:32numbers seem to actively fight each

10:33other. If I look at the rental yields in

10:35this report, they look terrible.

10:37This raises an important question,

10:38doesn’t it? Let’s define the gross

10:40rental yield really quickly. It is the

10:42annualized rental income you receive

10:44measured as a percentage against the

10:46total value of the property.

10:47Right? Nationally, that gross yield is

10:49hovering at a very low 3.6%. So,

10:51analytically, we have to ask, why are

10:53investors borrowing record amounts of

10:55money, driving a 98 billion quarter to

10:57buy properties that are offering a 3.6%

11:00gross return?

11:01Especially when you factor in the cost

11:02of debt. The average variable rate for a

11:05new investor loan is sitting up at

11:075.67%.

11:08Exactly.

11:09If your loan costs you almost 6% and the

11:11house only pays you back 3.6% 6% in

11:13rent. The math on the rental income

11:16alone means you are losing money every

11:18month. It doesn’t add up for a

11:20positively geared investment.

11:22It tells us definitively that these

11:24investors are not buying for the rental

11:26yield. They are chasing the capital

11:27growth.

11:28They just want the asset price to go up.

11:30Right? When investors see national

11:32values rising at 9.4% and specific

11:34markets like Perth exploding by 18.5%,

11:38they are more than willing to wear a

11:39poor rental yield. They will gladly

11:42accept a negative cash flow monthtomonth

11:44because they expect the underlying asset

11:46to appreciate by tens of thousands of

11:47dollars a year.

11:48It’s a gamble.

11:49It is a highly speculative environment

11:51driven by the fear of missing out on

11:53massive capital gains.

11:54But pouring $98 billion of debt into a

11:57speculative lowyield environment surely

11:59sets off alarm bells somewhere. And as

12:02we see in the regulatory section of this

12:04report, the authorities are stepping in

12:06hard.

12:06They had to. The Reserve Bank of

12:08Australia, the RBA, made a unanimous

12:10decision in February to raise the cash

12:12rate to 3.85%.

12:15It is their first interest rate hike

12:17since late 2023.

12:18The RBA has been forced to act. They are

12:21staring at an economy with sticky

12:23inflation that refuses to drop into

12:25their target band combined with a very

12:27tight labor market.

12:28Right. The dual mandate.

12:29Yes, the RBA has a dual mandate. Price

12:32stability and full employment. With

12:34inflation overshooting their forecasts,

12:36they had to pull the lever on rates.

12:39They essentially ended what was the

12:40shortest and most modest rate cutting

12:42cycle we have seen since 1993.

12:44You mentioned sticky inflation there.

12:46For anyone listening who hears that

12:48buzzword on the evening news, but isn’t

12:49quite sure what it means in this

12:51context, how does inflation get sticky?

12:53Think of it like trying to scrape gum

12:55off your shoe.

12:55Yeah, great visual.

12:57When inflation first spikes, it is often

12:59driven by volatile things like global

13:01oil prices or supply chain shocks. That

13:03is the loose dirt you can easily brush

13:05off. But sticky inflation refers to

13:07price increases that get embedded into

13:09the domestic economy, particularly in

13:11the services sector and rent,

13:12the things we pay for every day,

13:14right? Once a haircut, a restaurant

13:16meal, or a monthly lease goes up, it

13:19rarely comes back down. It sticks. And

13:21the RBA has left the door wide open for

13:24further rate hikes if those sticky

13:26consumer prices don’t start moving in

13:28reverse.

13:28And the RBA isn’t the only sheriff in

13:30town. APR, the banking regulator, is

13:33also stepping into the ring. They are

13:36introducing a new round of credit

13:37tightening that goes into effect this

13:40February.

13:40Yes, this is a big move.

13:42They are imposing a hard 20% limit on

13:44high debt to income lending. So, if you

13:46are listening to this right now and you

13:48are thinking about asking the bank for a

13:50loan that is six times your salary to

13:52jump into this investor frenzy, APR is

13:55effectively stepping in and telling the

13:56banks, “Not so fast.” AP is acting

13:59because they are seeing risk creeping

14:01back into the financial system. While

14:03high debt to income lending was

14:05contained at 6.1% back in September, it

14:07was starting to edge upward

14:08and they want to nip that in the bud.

14:10Exactly. Even more concerning for APR is

14:12the nature of these loans. Interestonly

14:14lending now makes up 20.9% of all new

14:17home loan originations.

14:19Think about that combination. record

14:22high property values, low rental yields,

14:25rising interest rates, and an increasing

14:27reliance on loans where the borrower

14:29isn’t even paying down the principle.

14:31They’re just treading water on the

14:32interest.

14:33Regulators get very nervous about

14:35financial stability in those conditions.

14:37They are trying to cool the investor

14:39frenzy before it creates a systemic

14:41risk. Okay, we have spent a lot of time

14:43talking about the buyers, the sellers,

14:45and the investors leveraging themselves

14:47to the hilt, but we have to talk about

14:50the people actually living in these

14:51properties.

14:52We do.

14:53There are 11.4 million dwellings in

14:56Australia, and millions of people do not

14:58own the roof over their heads. The data

15:01on the rental market in this report is

15:03genuinely sobering. For a while, it

15:05looked like rent growth was starting to

15:06slow down, giving people a chance to

15:08catch their breath,

15:09but this data shows it is reacelerating.

15:11Yeah,

15:11the national rental index is up 5.4%

15:14over the 12 months to January. To put

15:16that in perspective, just 6 months ago,

15:18that annual pace had slowed down to

15:203.4%.

15:21So, it’s picking back up.

15:22It is an incredibly tough environment

15:24for renters. The national rental vacancy

15:27rate eased off slightly from its

15:28absolute record lows, but it is still

15:31sitting at an incredibly tight 1.7%.

15:341.7%. Let’s break that down. That means

15:37out of every 1,000 rental properties in

15:39the entire country, only 17 are empty

15:43and available to rent. That severe lack

15:45of supply means landlords have immense

15:48pricing power to pass their rising

15:50mortgage costs directly onto their

15:51tenants.

15:52And that leads us straight to Kotali’s

15:54chart of the month.

15:55I scared at this specific chart for a

15:57long time. Amidst all the talk of

15:59trillions of dollars in quarterly

16:01rolling averages, this chart perfectly

16:03captures the human element of this

16:05macroeconomic machine.

16:06That’s a powerful visual.

16:07Over the past 5 years, the cost of

16:09renting in Australia has risen two and a

16:11half times more than wages. Two and a

16:13half times.

16:14If we connect this to the bigger

16:15picture, this single data point explains

16:17the intense suffocating cost of living

16:20pressure so many households are feeling

16:21right now. For most families, housing is

16:23their largest single expense. When that

16:25expense outpaces income growth by a

16:27factor of two and a half over half a

16:29decade, it fundamentally erodess a

16:31household standard of living. Renters

16:33are being squeezed in a vice from both

16:35sides

16:36because their paychecks aren’t moving.

16:37Their wages are barely moving in real

16:39terms while their rent demands an

16:40everinccreasing disproportionate slice

16:42of their paycheck every single month.

16:44So what does this all mean for the

16:46future? Is there any relief on the

16:47horizon? Because the basic rule of

16:49economics is that the cure for high

16:51prices is more supply. We clearly need

16:54to build more homes.

16:55We do.

16:56But looking at the final section of this

16:57report covering dwelling approvals, it

17:00feels like the cavalry is not coming

17:01anytime soon.

17:02The dwelling approvals data is arguably

17:04the most concerning part of the entire

17:06forward-looking outlook. Approvals

17:08actually fell by 14.9% in the month of

17:11December.

17:12Fell, not grew, fell

17:14fell. While approvals for detached

17:16houses ticked up by a tiny.3%, the real

17:19damage was in the higher density unit

17:21sector. So, apartments and town houses

17:23approvals there plummeted by a massive

17:2531.6%.

17:26That is a staggering drop for the exact

17:29type of housing we need to fit more

17:31people in.

17:31Over the entirety of the past year,

17:33there were almost 196,000 dwellings

17:36approved. Now, that is a 12.8% rise

17:38compared to the year prior. And it

17:40brings us roughly back to the decade

17:42average.

17:43But the decade average isn’t enough

17:44anymore, is it? Not with our current

17:46population growth and the massive

17:47backlog of demand. The report

17:49specifically notes that 196,000

17:52approvals is well below the levels

17:54required to reach the government’s

17:56highly publicized housing accords.

17:59We are basically treading water in a

18:00pool that is getting deeper every single

18:02day.

18:03The divergence between what we

18:04physically need to build to house a

18:06growing population and what is actually

18:08getting approved and built is stark.

18:10What’s holding it up? With construction

18:12costs remaining stubbornly high,

18:14persistent labor shortages in the

18:16skilled trades, and higher interest

18:18rates making project financing

18:19incredibly difficult for developers, it

18:22is exceptionally challenging to get

18:24highdensity unit projects off the

18:25ground. Without a massive sustained

18:28influx of new supply, the upward

18:30pressure on both rents and purchase

18:32prices is going to remain structural and

18:34persistent. All right, we have covered

18:36an immense amount of ground today and we

18:38have weighted through some incredibly

18:40heavy numbers. Let’s try to pull all of

18:42these threads together.

18:43We are looking at a 12.4 trillion

18:46Australian property market that is

18:48showing an incredible push and pull

18:50dynamic right now.

18:51Overall growth is slowing down to 9.4%

18:54annually. But underneath that headline,

18:56we have a booming twospeed market.

18:59Midsize capitals like Perth, Brisbane,

19:01and Adelaide are surging to absolute

19:03record highs, while giants like Sydney

19:05and Melbourne flatline.

19:06The divergence is key.

19:08And we have a historic lack of listings,

19:10down 17.8% nationally, driving up

19:13intense competition and keeping days on

19:15market extremely low. Into this supply

19:18vacuum, investors have borrowed record

19:20amounts of money, driving 98 billion in

19:22total quarterly lending. Despite the

19:24fact that rental yields are incredibly

19:26poor,

19:27they are chasing the capital growth

19:29which has forced the RBA to step in and

19:31raise interest rates to 3.85%

19:33and prompted APR to crack down on

19:35high-risisk lending. And finally, we

19:37have the renters who are bearing the

19:39absolute brunt of this disconnect with

19:41rent costs vastly outpacing wage growth

19:43over the last 5 years and housing supply

19:46approvals falling well short of

19:47government targets.

19:48So why does all of this matter to you?

19:51Whether you are a policy maker looking

19:52at economic strategy, a first home buyer

19:55trying to figure out if you should

19:56relocate to a booming market like Perth,

19:58an investor weighing yield versus

20:00growth, or simply a renter trying to

20:02understand why your lease renewal is so

20:04painfully expensive. These

20:05interconnected gears of inventory,

20:07investor behavior and RBA interest rates

20:09dictate the financial reality of the

20:11entire country.

20:13You cannot understand the Australian

20:14economy without understanding the

20:16mechanics of this data. It truly is the

20:19engine room of the nation’s wealth for

20:21better or worse. Which brings us to a

20:23final thought for you to take away and

20:24mle over today.

20:25Think about the societal implications of

20:27this data. If 55.4%

20:30of Australia’s total household wealth is

20:33tied up in housing and the cost of

20:35maintaining or entering that market is

20:37so vastly outpacing the growth of the

20:39wages people earn from actually working,

20:41we are watching a realtime structural

20:44shift in society. It is a shift from a

20:46society where wealth is primarily

20:48generated by your labor and income to

20:50one where wealth is almost entirely

20:52determined by asset ownership. Will the

20:55definition of the Australian dream have

20:56to permanently decouple from property

20:58ownership for future generations?

21:00And if it does, what takes its place?

21:03That is a heavy necessary question to

21:05ponder as we watch these trends unfold.

21:07Thank you so much for joining us on this

21:09deep dive into the numbers. Keep paying

21:11attention. Keep asking the hard

21:13questions. And keep analyzing the data

21:15around you.