10 things that make you a successful property investor

Renewed Rate Pressures

The Reserve Bank of Australia lifted its cash rate target by 25 basis points to 3.85% on February 3, 2026, the first increase in over two years. This followed stronger inflation readings in late 2025 that exceeded expectations, driven partly by housing-related costs and services. Market pricing had anticipated the move, with economists largely expecting it and some forecasting additional tightening later in the year.

Property prices surged 8.6% nationally in 2025, benefiting from earlier rate cuts that boosted borrowing capacity and buyer confidence. Momentum carried into early 2026, but the hike aims to cool demand and inflationary pressures. Forecasts vary: KPMG projects 7.7% national growth this year despite rate uncertainty, while others anticipate a slowdown to 4-5% or 5-7% as affordability constraints bite harder.

Supply shortages remain acute, with chronic underbuilding unable to match population growth and demand. Government policies, including deposit assistance schemes, have supported first-home buyers and investors, particularly in faster-growing states. This has led to a two-speed dynamic: Perth, Brisbane, and Adelaide show robust lending and price momentum, while Sydney and Melbourne lag.

Higher rates reduce borrowing power and serviceability, hitting leveraged investors hardest and potentially slowing transaction volumes. Yet inelastic supply and structural demand suggest price falls are unlikely in most areas; instead, growth may moderate unevenly. Tensions arise between curbing inflation without tipping the economy into recession and preserving housing market stability, as further hikes could exacerbate affordability issues already at historic lows in major cities.

Investors face trade-offs: cashflow-positive strategies gain importance over pure capital gains plays in a higher-rate environment, while regional and infrastructure-supported markets offer relative resilience compared to overvalued urban centers.