Should You Buy Property Now? Key Financial Factors to Consider
There is no crystal ball when it comes to property. No one can tell you with certainty whether prices will rise, fall, or plateau in the months ahead. Yet the question persists: is now the right time to buy?
It is one of the most common questions we hear from clients across all stages of life, whether they are purchasing a first home, adding to an investment portfolio, or restructuring assets ahead of retirement. The answer is never as simple as “yes” or “no.” It depends on a disciplined comparison of the financial factors at play, both in the broader market and in your personal circumstances.
Rather than trying to predict the future, let us walk through the key factors that should inform your decision in 2026.
Interest Rates: Where Do Things Stand?
Interest rates have a direct impact on borrowing capacity and the cost of servicing a mortgage. In February 2026, the Reserve Bank of Australia raised the cash rate by 25 basis points to 3.85 per cent, the first increase since November 2023. The RBA cited a material pick-up in inflation during the second half of 2025 and stronger than expected private demand as reasons for the move.
What does this mean in practice? For a borrower with a $750,000 variable rate mortgage, even a small rate increase translates to higher monthly repayments. If you are considering a property purchase, it is essential to stress-test your budget against the possibility of further rate movement. Several major bank economists have flagged the potential for an additional increase in May 2026, depending on inflation data released in late April.
The key takeaway is not to try to time rates perfectly. Instead, focus on whether you can comfortably manage repayments at current rates and at least one or two increases above that level. This kind of buffer planning is far more reliable than waiting for the “perfect” rate environment, which rarely arrives on schedule.
Housing Supply: A Structural Challenge
One of the most significant forces shaping the Australian property market is the persistent gap between housing supply and demand. According to the National Housing Supply and Affordability Council’s State of the Housing System 2025 report, Australia is forecast to fall approximately 262,000 dwellings short of the 1.2 million target set under the Housing Accord. The Council projects that housing demand will outpace supply across the entire five-year period to 2028/29, resulting in a cumulative shortfall of around 79,000 net dwellings.
This undersupply is not a short-term blip. Construction costs have risen substantially since the pandemic, labour shortages continue to constrain the building industry, and dwelling approvals remain well below the levels needed to meet government targets. In the 2025 calendar year, roughly 195,700 dwellings were approved for construction, around 44,000 fewer than the annual run rate required.
For prospective buyers, this supply constraint has real implications. Limited stock tends to support prices, particularly in well-located areas with strong demand from both owner-occupiers and investors. It also means that waiting for a significant price correction driven by oversupply is, based on current projections, unlikely in the near term.
Affordability: Know Your Numbers
Despite the supply dynamics supporting prices, affordability remains a genuine concern for many Australians. The national median dwelling value sits at approximately $900,000, and in cities like Sydney, median house prices are forecast to push toward $1.9 million by the end of 2026.
Before making any property decision, it is important to have a clear picture of your complete financial position. This means understanding your income stability, existing debts, savings buffer, and the ongoing costs of ownership beyond the mortgage itself, including council rates, insurance, maintenance, and strata levies if applicable.
A common mistake is to focus solely on whether you can secure loan approval. Approval tells you the maximum a lender is willing to lend; it does not tell you what you can comfortably afford while still meeting your other financial goals. If you are also saving for your children’s education, building a diversified investment portfolio, or planning for retirement within the next decade or two, these commitments all need to be factored into the equation.
This is where working with a financial adviser can make a real difference. A holistic view of your finances ensures that a property purchase supports your broader strategy rather than putting pressure on it.
Rental Market Conditions: The Cost of Waiting
For those who are renting while deciding whether to buy, it is worth considering what the rental market looks like. National vacancy rates remain near record lows, sitting at around 1.6 per cent according to recent data from NAB’s Housing Monitor. Advertised rents have continued to climb, rising 5.9 per cent on an annualised basis in the latter part of 2025.
Put simply, the cost of not buying is not zero. Every month spent renting is a month where your housing costs contribute to someone else’s asset rather than your own. This does not mean you should rush into a purchase you are not ready for, but it does mean that the “wait and see” approach carries its own financial cost, one that compounds over time as rents continue to increase.
For renters in a position to buy, the comparison should be straightforward: what is the total cost of renting over the next three to five years versus the total cost of owning, including interest, and how does each scenario affect your long-term wealth position? This is not a calculation driven by emotion or headlines; it is a disciplined financial comparison.
Market Conditions: Not One Market, But Many
It is tempting to speak about “the property market” as if it were a single entity, but Australia’s property landscape is highly fragmented. According to KPMG’s Residential Property Outlook for 2026, national house price growth is forecast at approximately 7.7 per cent, but the variation between cities is significant. Perth is expected to see growth of nearly 13 per cent, while Sydney and Melbourne are forecast for more moderate increases in the range of five to seven per cent.
Within each city, performance also varies by property type, price bracket, and location. The most competitive segment of the market in 2026 is expected to be properties under $1 million, partly driven by expanded government support schemes that allow eligible first home buyers to purchase with a five per cent deposit.
What this means for your decision is that where and what you buy matters as much as when you buy. A well-chosen property in a supply-constrained, high-demand area is likely to perform very differently over the next decade compared to an impulse purchase in an oversupplied pocket. Strategy and research matter far more than timing.
Population Growth: The Demand Driver
Underpinning much of the long-term case for Australian property is population growth. Australia’s population currently sits at approximately 27.6 million and is projected to surpass 30 million by 2030. That is close to three million additional people who will need somewhere to live within the next few years.
While net overseas migration has moderated slightly from its post-pandemic peak, it remains elevated by historical standards. This sustained population growth, combined with the structural undersupply of housing, creates ongoing demand pressure that is unlikely to ease quickly. For those taking a long-term view of property as part of a broader wealth strategy, this demographic trend is a significant factor to weigh.
Government Policy: Incentives and Their Impact
Several government initiatives are also influencing market dynamics in 2026. The expanded Home Guarantee Scheme allows more first home buyers to enter the market with a smaller deposit, and the Help to Buy scheme enables eligible Australians to purchase with the federal government contributing up to 30 per cent of the purchase price for existing homes.
These policies are designed to improve accessibility, but they also have the effect of increasing demand at certain price points. If you are eligible for one of these schemes, understanding how they interact with your broader financial plan is important. A lower deposit requirement may get you into the market sooner, but it also means a larger mortgage and potentially higher ongoing costs. The decision should be made with full awareness of the trade-offs involved.
The Disciplined Approach: Compare, Don’t Predict
The question “should I buy property now?” is really a question about whether purchasing property at this point in time aligns with your financial goals, your risk tolerance, and your personal circumstances. No amount of market forecasting can answer that for you.
What you can do is take a disciplined approach to the decision. Compare the cost of buying against the cost of renting. Model your cash flow under different interest rate scenarios. Understand how a property purchase fits within your total financial picture, alongside superannuation, investments, insurance, and any other commitments. Consider your time horizon; property is generally a long-term asset, and those who buy with a ten-year plus outlook are far less exposed to short-term market fluctuations.
And if you are unsure, seek guidance. A financial adviser can help you model the scenarios, identify the risks, and build a plan that gives you confidence in your decision, whatever that decision turns out to be.
Where to From Here?
The Australian property market in 2026 presents both opportunities and challenges. Supply remains tight, demand is supported by population growth and government policy, and interest rates, while higher than their recent lows, are still within a manageable range for many borrowers. At the same time, affordability pressures are real, and the outlook for rates carries genuine uncertainty.
The right approach is not to search for a crystal ball. It is to arm yourself with the facts, understand your own financial position clearly, and make a decision grounded in strategy rather than speculation. That is what turns financial uncertainty into confidence.