'Turning point': Home prices grind higher as rate hikes begin to bite

Property prices are at record highs around the country, but back-to-back interest rate rises have slowed the pace of price growth.

Australian home prices are now 9.4% higher than a year ago after a 0.3% increase in March, according to the latest PropTrack Home Price Index.

The data shows that price growth has slowed following the second interest rate rise from the Reserve Bank in as many months.

PropTrack senior economist Eleanor Creagh said monthly house price growth in most markets had decelerated compared with February.

“This points to a slowdown in growth emerging across the country and a clear turning point in the cycle, as rising interest rates weigh,” she said.

The RBA raised interest rates in March for the second time this year, with most of the improvement in borrowing capacities from rate cuts in 2025 now reversed.

Although the data shows signs that the market is cooling as interest rates moved higher, tight supply of homes and strong demand in many markets have helped to support values, Ms Creagh said.

“Recent rate rises will weigh on buyer sentiment, borrowing capacity, and erode already poor affordability, though a resilient labour market, population growth and first-home buyer support continue to underpin demand against limited supply,” she said. While prices rose in February in the vast majority of areas across the country, there were minor declines recorded in interest rate-sensitive markets, such as some inner and middle-ring areas of Sydney and Melbourne. “Overall, the market is shifting into a slower-growth phase, with a rising likelihood of flat or declining prices in some markets in the months ahead, even as structural supply shortages cushion the moderation,” Ms Creagh said. Although price growth has slowed at the national level, values are still climbing higher in Australia’s top-performing capital cities.

Prices rose to record highs in almost every capital city, with only Melbourne below its previous peak set in October last year.

Brisbane topped the list for price growth in March with a 0.7% uplift, with the city’s median home value now 17.7% higher than a year ago. This equates to a jump in values of more than $170,000 in just a year. Prices in Perth rose by 0.5% last month, reinforcing its status as Australia’s top-performing capital city market.

Prices in Perth are up a whopping 20.9% in the past year, and have doubled in the past five years.

A median-priced Perth house is now worth $203,000 more than a year ago, while units cost about $136,000 more than the same time last year.

Darwin is now in third place for annual price growth, with values up 16.8% in the past 12 months – a combined result of an investor boom and tight housing supply. Property buyers seek value in regional markets

Regional Australia is outpacing the capitals for home price growth – a sign that homebuyers and investors are gravitating towards property markets where homes are more affordable.

Home prices grew by 11% in the regions in the past year, compared to 8.8% for the combined capitals in that same period. The regions also outperformed for five-year growth, with median values rising by 57% compared to 39% in the capitals.

Ms Creagh said the relative affordability and lifestyle appeal of regional Australia had supported stronger price growth.

Based on median prices, a house in regional Australia is about $450,000 cheaper than in the capitals, while units are $109,000 more affordable.

That relative affordability has driven price growth outperformance in smaller regional cities such Toowoomba, Launceston and Ballarat, which are among the strongest regional markets in their respective states. Housing slowdown to extend as rates go higher The RBA is expected to increase rates three more times this year in May, June and August, according to Westpac chief economist Luci Ellis.

Petrol price surges as a result of the conflict in the Middle East were already being passed through into the rest of the economy, Ms Ellis said, fuelling further inflation.

“The RBA will have already been spooked by the way inflation kicked up late last year after it took back some of its earlier rate hikes,” she said.

“We therefore suspect that the unwind of the current policy tightening will involve something of a ‘one bitten, twice shy’ mentality.” Rate hikes in the coming months could further slow the housing market, Ms Creagh said.

“Another interest rate rise if delivered in May and potentially again later in the year would add further pressure on borrowing capacity and buyer demand,” she said.

“As a result, the market is shifting into a slower-growth phase, with an increasing likelihood of flat or declining prices in some areas, although persistent supply shortages should help limit the moderation.”

Daniel Butkovich, Property Journalist published 1 Apr 2026