Cotality and Outlook Comment Jan 2026: Australian House Prices Continue to Rise Despite Rate Hike Expectations

House prices are still rising throughout the country even with the change in expectations to rate hikes rather than cuts in 2026, and that means that Land markets will continue to improve in 2026.

Land Markets Poised for Further Growth in 2026

The Melbourne land market recovery we saw in sales in the second half of 2025 will continue in 2026, if a bit more slowly than we might have expected just four months ago.  And booming house prices in Brisbane, Perth and Adelaide mean those markets will continue to see very strong price growth in vacant land, as they struggle to make enough new supply available to buyers.

Cotality Home Value Index Shows Ongoing Price Growth

Cotality’s Home Value Index for January rose 0.8%, actually a step up from December’s 0.6%, but well below what we were seeing in November and October before the rates outlook changed from cuts to hikes.

Annual House Price Growth Strengthens Across Major Capital Cities

Because of how weak the market was 12 months ago, even mild monthly rises mean annual price growth continues to increase, even for Sydney and Melbourne. Combined with the fact that household spending and economic activity are looking strong, and it’s not all downside for the property sector.  

Auction Clearance Rates Show Early Signs of Resilience

Auction clearance rates in the two largest auction markets in the country (Sydney and Melbourne) also showed some resilience in the first weekend of auctions, with clearance rates rising from December levels, after they had steady fallen since Spring.

What This Means for the New Land Market in the Second Half of 2026

We can expect that annual rate of house price growth to start stabilising and even easing back by the second half of the year, but in markets where new land shortages persist, any weakness will take a long time to flow through to the new land market.

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