Weekly Market Update (09 January 2026)

Rental Growth, Yields & Supply Pressures (Source: Smart Property Investment)
Rents in Australia grew 5.2% in 2025, with unit markets outperforming houses at 5.5% growth compared to 5.1%, while regional markets continued to exceed capital city growth at 6.2%. Darwin led rental growth in 2025 with 8.2% increase, while Sydney remained the most expensive capital at $817/week; over five years, rents have increased 42.9% nationally, adding over $200 weekly to median rental values. House price increases of 52.6% over five years have outpaced rental growth, reducing investor yields to 3.56% (the lowest since 2022), while units command a 134-basis-point yield advantage over houses in capital cities. Low rental supply remains a key driver of price growth with listings 11% lower than December 2024 and 17% below the five-year average, causing renters to spend a record-high 33.4% of pre-tax income on rent.

Inflation & Interest Rate Outlook (Source: Smart Property Investment)
Australia’s inflation fell to 3.4% in November from 3.8% in October, with trimmed mean inflation easing to 3.2%, but experts remain divided on whether this is sufficient to prevent interest rate increases. Major banks are predicting future cash rate hikes: Commonwealth Bank expects a 25 basis point rise to 3.85% in February, while NAB predicts a more aggressive cycle with two hikes bringing rates to 4.1%. Oxford Economics argues the inflation data should be enough for the Reserve Bank to hold rates steady, as the 3.2% trimmed mean figure is at the threshold level. Canstar warns that rate increases remain likely and advises borrowers to prepare, as a 0.25% increase would raise monthly repayments by approximately $90 on a $600,000 loan.

Rental Affordability & Lifestyle Trade-Offs (Source: Property Update)
The income needed to rent a home without rental stress across Australian capitals has surged 51% since 2019, rising from $74,533 to $112,667. Sydney is the least affordable city, requiring around $135,200 annually to rent a median house, while Melbourne and Hobart require approximately $100,500. Sydney exhibits a sharp affordability gradient, with incomes dropping from $216,000 near the CBD to $112,000 in outer suburbs, then rising again in lifestyle regions. Melbourne has the narrowest gap between house and unit rents ($900) due to strong apartment supply and diverse housing options. The most affordable rental areas are typically located 30–40 kilometres from the CBD, offering a balance between lower rents and reasonable commute distances. Vacancy rates below 1.5% across all capital cities indicate critically tight supply, with construction lagging behind population growth and demand. Rents are expected to remain under pressure through 2026 due to structural undersupply, with renters forced to make difficult trade-offs between location, space, and commute times.

Investor Strategy & Portfolio Trends (Source: Smart Property Investment)
Investors should diversify their portfolio strategy across asset classes in 2026, with property becoming increasingly important alongside superannuation to bridge the gap between retirement expectations and average super balances. Rentvesting is expected to rise significantly among younger buyers in 2026, with 54% of first home buyers considering this strategy to afford property investment in high-growth areas they cannot afford to live in. Self-managed super funds (SMSFs) for property investing will surge in 2026 as setup costs have dropped from $10,000 to $1,500, making it accessible for more Australians to use their superannuation for property wealth-building. Despite greater access to information about interstate and national property markets, many prospective buyers are paralyzed by analysis and conflicting advice, creating a growing wealth gap between those who use information wisely and those left behind.

Property Values, Rents & Regional Performance (Source: Smart Property Investment)
Property values grew 8.6% in 2025, the strongest year since 2021, but growth slowed to 0.7% in December, prompting warnings of more modest growth in 2026. Sydney and Melbourne experienced their first month-on-month decline since January 2025, while Darwin led annual growth at 18.9%, followed by Perth (15.9%) and Brisbane (14.5%). Regional properties outpaced metropolitan areas with 9.7% annual growth compared to 8.2%, with Western Australia leading at 16.1% growth. Rents rose 5.2% in 2025 with vacancy rates remaining near record lows; further rent increases expected in 2026 despite softening market conditions driven by RBA rate uncertainty and affordability pressures.

Market Balance & Buyer Behaviour in 2026 (Source: Smart Property Investment)
The 2026 property market is expected to experience measured price growth with smaller capitals like Perth, Adelaide, and Brisbane outperforming major cities like Sydney and Melbourne. Interest rates are predicted to remain steady in 2026, shifting market dynamics from rate-driven growth to supply-and-demand factors, with increased seller activity expected as homeowners test the market. Renters will face continued pressure due to limited new housing developments, keeping vacancy rates low and supporting ongoing rent growth that benefits investors. Buyers will prioritize value and affordability, shifting demand toward outer suburbs, regional hubs, and alternative housing types like townhouses and apartments rather than focusing on premium postcodes. Modern technology and sustainability features such as solar panels, batteries, and EV charging stations are becoming increasingly important to buyers, particularly younger purchasers seeking environmentally efficient homes.

Rental Market Conditions — January 2026 (Source: Property Update)
Rental vacancy rates rose slightly in December from 1.5% to 1.6%, though this may reflect seasonal factors rather than genuine easing of tight rental conditions. National rents increased 5.2% in 2025, up from 4.8% in 2024 but significantly lower than the near 10% annual increases seen in 2021–2023 driven by smaller households and overseas migration. All major regions experienced rent growth in 2025, with Western Australia leading at 10.1% annual increase, while Melbourne saw the smallest rise at 2.9%. Gross rental yields have declined to their lowest level since September 2022 at 3.56% nationally, as property values are rising faster than rents, with Sydney recording the lowest capital city yield at 3.0%. 

– Sydney: 6/ 16.7%
– Melbourne: 1 / NA
– Brisbane: NA / NA
– Perth: NA / NA
– Canberra: 2 / NA
– Adelaide: 1/ 100%
– Tasmania: NA / NA
– Combined Capitals: 10 / 20%