Australian residential property market is on the up in capital cities
The local landscape is still hard to predict as interest rate rises loom
2 min
The property downturn in Australia may have turned a corner, information from data analytics company Neoval suggests, with capital city prices increasing by 1.9 percent since December.
Ray White chief economist Nerida Conisbee said while it’s unlikely increases will happen at the same pace that they did during the pandemic, the market appears to have stabilised, with Sydney leading the way. Neoval data showed Sydney prices have increased 2.7 percent, followed by Canberra and Melbourne, which both saw a 2.0 percent rise. Hobart and Brisbane prices went up by 1.8 percent, while Adelaide (1.4 percent), Perth (1.3 percent) and Darwin (1.1 percent) rounded out the capitals.
Ms Conisbee noted that the increases reflected different circumstances in each capital, making it harder to predict price movements going forward. While a resources boom in Perth and less sensitivity to interest rate rises in areas like Darwin may have contributed to higher prices, flooding in Brisbane last year will continue to put pressure on accessibility to trades in that city as homeowners try to rebuild.
The impact of further interest rate rises and fixed rate home loans soon ending for a substantial number of borrowers across the country was also yet to be felt. The RBA is scheduled to meet tomorrow, with most experts predicting a further rate rise.
“If house prices do now show a continual increase from this point forward it highlights the complexity of property markets,” Ms Conisbee said. “House prices are very sensitive to interest rates and there is almost complete consensus that these will continue to increase for a bit longer.
“We also have a lot of loans coming off fixed rates and this is likely to make some investment properties less financially attractive. It will also mean that holding a vacant property such as a holiday home, less desirable. It is likely more properties will come to market.”
Automobili Lamborghini and Babolat have expanded their collaboration with five new colourways for the ultra-exclusive BL.001 racket, limited to just 50 pieces worldwide.
As housing drives wealth and policy debate, the real risk is an economy hooked on growth without productivity to sustain it.
Strong consumer spending and tight supply have driven retail to the top of commercial property, but signs of pressure are starting to emerge.
2 min
Australia’s retail property sector entered 2026 as the strongest performing commercial asset class, but rising geopolitical risks and cost pressures are beginning to test its resilience, according to new research from Knight Frank.
The latest Australian Retail Review shows the sector rode a wave of consumer spending and constrained supply through 2025, delivering total returns of 9.2 per cent and driving transaction volumes up 43 per cent year-on-year to $14.4 billion.
That momentum carried into early 2026, with around $3.6 billion in deals recorded in the first quarter alone.
“Retail clearly emerged as the standout commercial property performer in 2025,” said Knight Frank Senior Economist, Research & Consulting Alistair Read.
“Improving household spending, limited new supply and stronger leasing fundamentals combined to drive better income growth and renewed investor confidence in the sector.”
Spending rebound drives retail strength
A lift in household spending has been central to the sector’s performance. Consumer spending rose 4.6 per cent year-on-year to February 2026, supported by easing inflation and improving real incomes.
That shift flowed directly into retailer performance, with average EBIT margins across major retailers rising to 8.9 per cent in the first half of 2026, their strongest level in several years.
“Stronger consumer spending was critical in restoring momentum to the retail sector,” Mr Read said.
“Retailers have generally been better able to absorb costs, rebuild margins and support sustainable rental outcomes, particularly in higher-quality centres.”
Improved trading conditions also pushed leasing spreads up 4.2 per cent in 2025, reinforcing income growth and supporting capital values.
Geopolitical tensions begin to bite
But the outlook has become more complicated. The report warns that escalating conflict in the Middle East and its impact on fuel prices, supply chains and interest rates could weigh heavily on consumer spending.
“Higher fuel prices, flow-on cost pressures across supply chains, and recent interest rate increases are collectively squeezing household budgets, and early consumer sentiment data suggests confidence is already softening,” Mr Read said.
“While household balance sheets remain generally resilient, heightened uncertainty over future costs is likely to weigh on spending — particularly in discretionary categories — in the months ahead.”
The impact is already being felt in investment activity. While the year began strongly, transaction volumes slowed in March as investors paused amid the uncertainty.
“Early indicators suggest elevated uncertainty has already begun to affect the market. While retail investment enjoyed its strongest start to a year in a decade, with nearly $3 billion transacted by the end of February, activity stalled in March, as investors took a pause amid elevated uncertainty,” Mr Read said.
Solid foundations support medium-term outlook
Despite the near-term headwinds, Knight Frank maintains that the sector’s underlying fundamentals remain strong. Limited new supply, high construction costs and population growth are expected to continue supporting rental growth over the medium term.
“Retail has entered this period of uncertainty from a position of strength,” Mr Read said.
“Supply-side constraints, population growth and improving income fundamentals remain powerful structural supports for the sector.”
The report highlights several trends shaping the year ahead, including steady yields as interest rates rise, mounting pressure on tenant margins, continued outperformance of prime centres, the growing need for logistics integration, and risks linked to underinvestment in capital expenditure.
For now, retail remains a sector with momentum, but one increasingly at the mercy of forces far beyond the shopping centre.
A haven for hedge-fund titans and Hollywood grandees, Greenwich is one of the world’s most expensive residential enclaves, where eye-watering prices meet unapologetic grandeur.
Odd Culture Group brings a new kind of after-dark energy to the CBD, where daiquiris, disco and design collide beneath the city streets.
