Market Pulse

Australian property market — May 2026. RBA resumed hiking cycle on 5 May 2026.

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RBA raised rates 25bp on 5 May 2026 — now 4.35%

Inflation re-accelerated to 4.6% (CPI Mar 2026), forcing the RBA back into tightening mode. Borrowing capacity is shrinking. High-yield cashflow properties are now more important than ever. Rate-sensitive markets face headwinds.

NATIONAL MACRO — MAY 2026

RBA Cash Rate

4.35%

↑ Hiking

Raised 25bp May 2026

National Median

$908k

+4.2% YoY

PropTrack Mar 2026

Unemployment

4.3%

Stable

ABS Mar 2026

Net Migration

440k

Elevated

Annual net migration

Inflation (CPI)

4.6%

↑ Re-accelerating

CPI Mar 2026 — driving hikes

Housing Shortfall

174k

Worsening

Dwellings needed

PerthWA

Strong — rate sensitiveCautious buy

Tightest vacancy nationally at 0.5% supports prices despite rate hike. Mining sector employment strong. Rate sensitivity increasing — stick to high-yield properties that cashflow at 4.35%.

Median

$780k

12m growth

+12%

Vacancy

0.5%

Bulls

+Vacancy 0.5% — nationally lowest

+Mining employment boom

+Strong interstate migration

Bears

—Rate hike erodes borrowing capacity

—Affordability stretching fast

—Need cashflow-positive properties at 4.35%

AdelaideSA

Mid-cycle growthBuy selectively

Best risk-adjusted capital city opportunity. Still affordable relative to Sydney and Melbourne. Strong migration inflows. Moderate rate sensitivity due to lower entry prices and decent yields.

Median

$720k

12m growth

+9%

Vacancy

0.6%

Bulls

+Most affordable capital city

+Strong interstate migration

+Reasonable yields buffer rate hikes

Bears

—Smaller economic base

—Rate hike slows growth momentum

BrisbaneQLD

Mid-late cycleSelective buy

Strong migration and Olympic 2032 pipeline remain compelling. But rate hike adds pressure on overleveraged buyers. Outer suburbs with higher yields more resilient. Avoid new units.

Median

$870k

12m growth

+8%

Vacancy

1.0%

Bulls

+#1 migration destination nationally

+Olympic 2032 infrastructure

+Diversified economy

Bears

—Rate hike pressures overleveraged buyers

—Some unit pockets oversupplied

—Affordability compressed inner suburbs

SydneyNSW

Under pressureAvoid

P/I ratio already above 14x before this rate hike. Affordability crisis now critical. Borrowing capacity shrinking. Very thin buyer pool. Rate hike is exactly what this market did not need.

Median

$1.29M

12m growth

+2%

Vacancy

1.5%

Bulls

+Global city liquidity premium

+Rental demand from migration

Bears

—P/I >14x — worst affordability nationally

—Rate hike destroys remaining buyer pool

—2% growth near ceiling now

MelbourneVIC

Stalled recoveryHold — wait

Rate hike delays the post-correction recovery further. Unit oversupply from 12% approval spike now meets rate headwind. Houses more resilient than units but momentum very weak.

Median

$790k

12m growth

+1%

Vacancy

1.6%

Bulls

+Largest population base

+Long-term population growth

+Post-correction value on houses

Bears

—Rate hike delays recovery timeline

—Unit oversupply (12% approvals) worsening

—Highest land tax nationally — worse at higher rates

HobartTAS

Flat under pressureAvoid

Post-boom hangover now compounded by rate hike. Thin economic base and tourism sector vulnerability. Rate rise hits discretionary spending that drives the local economy. Hold if owned, do not buy.

Median

$620k

12m growth

+1%

Vacancy

1.8%

Bulls

+Still affordable vs mainland capitals

+Lifestyle appeal

Bears

—Rate hike hits tourism-driven economy hard

—Thin economic base

—Low liquidity — hard to exit

Key risks — May 2026

—RBA hiking cycle resumed — 4.35% rate crushes borrowing capacity and variable mortgage holders

—Inflation at 4.6% re-accelerating — more hikes possible before end of 2026

—Sydney: P/I ratio extreme, rate hike worsens already critical affordability

—Melbourne unit oversupply meets rate pressure — double headwind for unit investors

Opportunities — May 2026

+High-yield regional QLD (Toowoomba, Mackay): cashflow positive at current rates — rate hikes less damaging

+Adelaide outer: still affordable, strong migration, best risk-adjusted capital city play

+WA Regional (Bunbury, Geraldton): tight vacancy buffers rate pressure on yields

+Rate hike creates motivated sellers — negotiating power increases for cash-ready buyers