Opinion: This week’s 25-basis-point interest rate rise marks a turning point in buyer behaviour as we move through Q1 and into Q2 2026. With inflation still elevated and borrowing power reduced, we expect the property market to shift further away from momentum-driven decision-making and toward affordability-led outcomes. The market is not retreating — it is recalibrating.
As a result, we expect buyers to become increasingly focused on what is genuinely affordable, rather than what is being marketed. This shift will be felt most clearly in the lower and mid-tier housing segment, from entry-level homes through to larger family properties. Reduced borrowing capacity means fewer buyers can stretch beyond comfort levels, and we expect this to translate into greater scrutiny of pricing, longer decision cycles, and increased negotiation.
We also expect buyers to place less weight on aspirational marketing guides and more emphasis on comparable sales and real transaction evidence. In a tighter lending environment, understanding true market value — and negotiating accordingly — becomes a critical advantage. Buyers who are prepared, informed, and realistic are likely to find more opportunity than in recent years.
At the upper end of the market, we do not expect demand to disappear, but we do expect behaviour to remain measured. Observations from recent premium auctions in South-East Queensland reinforce this view: attendance remains strong, interest is evident, yet fewer decisions are being made publicly or unconditionally. We expect this pattern to continue, with buyers preferring private negotiations once pricing expectations align, rather than committing under auction pressure.
For investors, we expect conditions to increasingly favour those with clarity around yield, holding costs, and long-term fundamentals. Softer momentum in some segments is likely to open negotiation windows, particularly where borrowing constraints narrow the buyer pool. Price growth may moderate, but value-driven acquisitions become more achievable.
For family home buyers, we expect affordability to become the defining constraint. Emotional urgency is likely to give way to cautious assessment, with buyers prioritising financial resilience over speed. Homes that align with revised budgets will continue to transact, while those priced beyond affordability thresholds may take longer to sell or require price adjustment.
Looking ahead into Q2 2026, we expect the market to reward discipline over haste. This week’s rate rise does not signal the end of opportunity — it reshapes it. Buyers who adapt expectations, engage in realistic pricing discussions, and negotiate based on value rather than momentum are likely to be best positioned in the months ahead.
What We Expect to See Next
- Greater buyer focus on affordability ceilings
- More negotiation, fewer unconditional decisions
- Reduced influence of aspirational price guides
- Longer decision timelines, especially in mid-tier markets
Regional Victoria vs South-East Queensland: How Buyers Are Reacting Now
Regional Victoria
We expect buyer behaviour to tighten first and fastest in Regional Victoria. With affordability now the dominant constraint, buyers are likely to cap budgets early and disengage from properties priced beyond lending limits. The practical outcome is fewer emotional purchases and more price testing, particularly in family-home price ranges where borrowing power has been most reduced. Buyers here are expected to move cautiously, transact selectively, and rely heavily on comparable sales rather than marketing narratives.
South-East Queensland
South-East Queensland presents a different dynamic. Demand remains visible and well attended, particularly in premium markets, yet buyer commitment is becoming conditional. Recent auction activity suggests the auction process itself is increasingly used to identify genuine buyers rather than force outcomes. We expect this market to continue trading, but with buyers favouring post-auction negotiation and disciplined pricing rather than public competition.
What This Signals
Both markets remain active, but the nature of demand is changing. Regional Victoria is adjusting through affordability pressure; South-East Queensland through buyer strategy. In both cases, we expect buyers to assert greater control over pricing discussions as the market absorbs the impact of higher interest rates.
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