On the national level, home prices are still rising at a considerable pace, but taking a closer look at the state-by-state breakdown shows the market is forking. 

An unwelcome interest rate hike in February has further split housing performance between Australia's capital cities, with some continuing to soar while others have slowed right down. 

Find out what's unfolding so far in 2026.

Australian property prices: February 2026

The national median home value rose by another +0.8 per cent over February, according to Cotality's latest report. 

Annual gains have reached a full +9.9 per cent, marking a strong 12 months since the Reserve Bank of Australia's (RBA) first rate cut in February 2025.

While national growth was strong, Sydney and Melbourne held flat for the month, indicating both cities have hit a plateau so far in 2026. 

The mid-sized capitals continued to climb, though. Perth accelerated with a +2.3 per cent upswing, Brisbane delivered another +1.6 per cent gain, and Adelaide grew by +1.3 per cent. 

Hobart and Canberra got a sudden jump over February, with prices rising +1.2 per cent and +0.8 per cent respectively, while Darwin saw a sharp slowdown after a staggering year of growth, moving just +0.2 per cent for the month. 

Regional markets carried strong momentum, either closely matching or outperforming their capital city counterparts. Regional NSW and Victoria in particular defied the flatness seen in Sydney and Melbourne. 

Cotality's research director, Tim Lawless, noted that Australia's two most populous cities don't always determine the direction the rest of the market moves. 

"The clear slowdown in housing conditions across Sydney and Melbourne could signal an easing in growth conditions elsewhere down the track, but for now, the mid-sized capitals continue to see support from extremely low inventory levels, which is boosting the growth in values," he said.

Three key takeaways from the current market

A number of property trends have become more firmly entrenched, while other shifts are now just emerging as 2026 begins. Here are the headline issues worth tracking. 

February's rate hike has cemented two-speed market dynamics

The surprise interest rate hike in February has acted as a key driver for a growing divide in the Australian property landscape. 

Consumer confidence has taken a hit as the economic outlook has changed, and that impact has been particularly felt in the southeastern capitals. 

Sydney and Melbourne have proven to be the least resilient in the face of rising rate pressure, with both cities recording 0.0 per cent growth in February amidst more caution amongst buyers. 

In stark contrast, the mid-sized capitals continue to move at a different speed entirely. Momentum has remained particularly strong in Brisbane, Peth and Adelaide, despite the relative affordability these cities once represented having been eroded by strong price gains in recent years. 

The divergence is also being seen in one of the most important real estate metrics. 

Listing numbers are now vastly different between states

One of the defining trends of 2025 was a widespread shortage of housing stock around the country. 

With buyer demand broadly outpacing supply, property prices went up in the vast majority of markets. But, in 2026, the trend is beginning to splinter. 

Cotality's report detailed how, in the four weeks to February 22nd, listing levels in Perth, Brisbane and Adelaide were 48 per cent, 31 per cent and 23 per cent below the five-year average respectively.

On the other hand, Sydney and Melbourne were down just 1.0 per cent and 4.3 per cent respectively on the same five-year average, indicating that sellers have been actively returning to the market. 

"Vendors are looking more motivated in Sydney and Melbourne, possibly looking to beat a further softening in selling conditions as clearance rates ease and demand slows," Mr Lawless explained. 

"If the typical seasonal pattern holds, the flow of new listings is likely to strengthen leading into Easter."

Lower-value tiers continue to outpace premium markets

Affordability remains a dominant force in the market, with the lower quartile of the value spectrum significantly outperforming more expensive homes. 

This is particularly evident in Sydney, where house values in the most affordable 25 per cent of the market rose 0.8 per cent in February, while the most expensive quadrant of properties actually fell in value by 0.9 per cent.

"There is a lot of competition for lower-priced properties," Mr Lawless noted. "First home buyers, investors and subsequent buyers are all competing across this sector of the market, while credit is less available across the higher price points due to serviceability constraints."

With the government's 5 per cent deposit guarantee now standard for many entry-level buyers, competition remains fierce for homes priced below major capital city median values.

Westpac analysts also noted that while the premium end of the market is being hit by high debt levels and tighter serviceability, the lower end is being propped up by consistently strong demand, particularly as tenants look to escape excessively tight rental markets.

What's next for Australian property?

Following the RBA's surprise February rate hike, the big question mark hanging over Australia's property markets will be whether future hikes are on the cards. 

Three of the big four banks are predicting that February's hike was a 'one-and-done' move, with only NAB expecting a further 0.25 per cent increase to come in May. 

The escalating conflict in the Middle East has added some further uncertainty to the global economic outlook, as potentially rising energy prices could impact future inflation movements here in Australia. 

In response to the stiffer interest rate outlook, forecasters have slightly dialled back expectations. Westpac has revised its national dwelling price forecast down to 5 per cent growth for 2026 as affordability constraints begin to bite harder.

Despite the headwinds, Cotality points to a number of persistent tailwinds helping push Australian property prices higher. 

Advertised stock remains at desperate lows in Perth, Brisbane, and Adelaide, providing a firm floor for prices. First home buyer activity also remains a major pillar of support thanks to 5 per cent deposit incentives, while a critically tight rental market continues to push tenants toward the security of homeownership.

Overall, the year ahead is shaping up to be one of softer, more uneven growth. The current two-speed dynamic is expected to sustain as 2026 unfolds, with the mid-sized capitals likely to continue outperforming the more rate-sensitive Sydney and Melbourne markets.