Navigating Rising Rates and Ongoing Demand in 2026
By Leigh Martinuzzi | Martinuzzi Property Group – eXp Australia
As we enter 2026, the Sunshine Coast property market is experiencing a unique set of dynamics. The national market is showing signs of fragmentation, with some cities seeing growth while others like Sydney and Melbourne are struggling. From my perspective, the Sunshine Coast continues to hold strong, with ongoing demand driven by lifestyle factors, a chronic supply shortage, and local migration trends. However, as interest rates rise, there are key considerations for both buyers and investors to keep in mind.
National Market Trends: A Multi-Speed Environment
We are seeing a divided property market across Australia. While Perth, Brisbane, and Adelaide are benefiting from strong growth, cities like Sydney and Melbourne are facing flat or declining prices. Nationally, house prices have increased by 10.6% annually, and unit prices by 8.6%. This is a far cry from the performance we’re seeing here on the Sunshine Coast, where prices are maintaining a strong upward trajectory.
From my point of view, the Sunshine Coast’s appeal as a lifestyle destination continues to fuel demand. While major cities are slowing down, the Sunshine Coast is benefiting from strong migration patterns, particularly from those moving away from the high costs of cities like Sydney and Melbourne. The region offers a unique blend of lifestyle, affordability (compared to the capitals), and coastal charm that keeps attracting buyers, particularly families and retirees.
The Interest Rate Puzzle: What’s Happening on the Sunshine Coast?
The Reserve Bank of Australia (RBA) raised the cash rate to 3.85% earlier this year, and with predictions for more rate hikes in 2026, many expected a slowdown in the property market. But as Michael Matusik points out in his analysis, the typical relationship between rising rates and falling property prices doesn’t seem to be holding true. The Sunshine Coast seems to be largely insulated from these trends, with many buyers still active despite the cost of borrowing increasing.
In my opinion, this is largely due to the presence of equity-rich buyers like down-sizers, upgraders, and those with strong intergenerational wealth who are less affected by the interest rate hikes. For example, families selling properties in more expensive cities and buying here on the Sunshine Coast have a higher tolerance for increased mortgage payments. While this may put pressure on first-time buyers, it means the Sunshine Coast market remains highly competitive, even with the rising interest rates.
Supply Constraints: The Heart of the Price Increases
A major issue across the Australian property market, and especially on the Sunshine Coast, is the severe undersupply of housing. Listings are still 25% below the five-year average, and construction approvals remain at decade lows. This has kept demand high in the Sunshine Coast market, as fewer properties are available for the increasing number of buyers.
Michael Yardney’s article about supply and demand reinforces this point while more homes are being built, they’re often not in the locations or of the type that buyers want. For example, there are many new high-rise apartments, but they don’t meet the demand for family-friendly homes in the suburbs. This mismatch between supply and demand has kept prices elevated in areas like Maroochydore and Noosa, where families and professionals are increasingly looking to settle.
From my experience, the lack of supply, combined with demand for well-located family homes, is likely to keep property prices on the Sunshine Coast moving in the right direction, despite broader economic challenges. The absence of affordable housing options for growing families means that prices are continuing to rise in those key suburbs that have long been in demand.
Affordability: The Growing Challenge for First-Time Buyers
The Australian government’s housing policies, such as the 5% Deposit Scheme, have played a significant role in encouraging homeownership, particularly for first-time buyers. While these policies aim to make housing more accessible, Michael Matusik highlights that they often lead to unintended consequences. Specifically, they push more demand into a market already struggling with supply, further driving up prices and contributing to inflation.
In the Sunshine Coast context, I see this playing out as more first-time buyers are using these government schemes to secure their first homes. However, this demand has driven prices higher, especially in the more affordable segments. As supply remains limited, and as demand continues to be fueled by government incentives, property prices in these areas are likely to remain elevated.
This vicious cycle where demand is artificially boosted by government policies, leading to higher prices, which in turn fuels inflation and drives the RBA to increase rates is something I’ve noticed in my own experience. While these policies are designed to help, they are also contributing to higher property costs across the board.
What This Means for the Sunshine Coast Market
The Sunshine Coast remains one of the best property markets in Australia, even as national trends show signs of slowing down. For those of us living and working here, it’s clear that the region continues to outperform many other areas. The combination of strong migration, a chronic housing shortage, and the appeal of coastal living ensures that demand remains high, particularly in family-oriented suburbs like Maroochydore and Noosaville.
However, we can’t ignore the fact that affordability is becoming a real challenge. As prices continue to rise, it will be interesting to see how long the market can sustain this growth, especially for first-time buyers. While some areas will likely see more moderated growth in the second half of 2026, the Sunshine Coast’s unique characteristics like its lifestyle, migration appeal, and supply constraints, mean it is likely to remain a top performer in the property market for the foreseeable future.
Advice for Sellers, Buyers, and Investors
For Sellers: If you’re looking to sell in 2026, now is a great time, especially in sought-after areas. While interest rates may be climbing, demand remains strong due to the ongoing migration trends and lifestyle appeal of the Sunshine Coast. Pricing your property correctly and preparing it well for market will help you maximize its value.
For Buyers: It’s important to act quickly, particularly if you’re looking in areas with high demand. With interest rates on the rise, locking in a property now may help you avoid future rate hikes, which could push your borrowing power further down. Also, be prepared for higher competition in popular suburbs, so be ready to move quickly when you find the right home.
For Investors: The Sunshine Coast still presents strong opportunities, particularly for long-term investors. The ongoing demand for rental properties, coupled with low vacancy rates, makes this a strong market for buy-and-hold strategies. However, investors should keep a close eye on rising rates and the potential for price moderation in certain areas as affordability becomes a more pressing issue.
Looking ahead, I remain optimistic about the Sunshine Coast’s property market, but it’s important to stay informed about the broader economic forces at play. While rising interest rates and government policies are contributing to higher costs, the region’s strong demand and limited supply will continue to push property values upward. For buyers, sellers, and investors, now is the time to act, but always with a clear understanding of the forces shaping the market.
If you are considering buying, selling or investing in property on the Sunshine Coast, understanding both the national and local market trends can help you make more confident decisions.
At Martinuzzi Property Group, we’re here to deliver more than a sale. We guide you with radical honesty, exceptional communication, and a stress-free experience, backed by calm confidence, local expertise, and genuine care so you feel informed, supported, and in control from day one to sold.
If you’d like a clear, no pressure view of what your home could achieve in today’s market and what you can do to maximise the outcome, I’m happy to help.
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Sources and Market Data
- What Really Drives Property Prices Higher
- Property News Headlines & Forecasts
- A Viscous Cycle: How Housing Policy, Inflation and the RBA are Now Tightly Intertwined
- Westpac and NAB Now Predict Three Back-to-Back RBA Hikes – New Report Reveals