Rate Hold Brings Calm, But Housing Pressures Persist Across Australia and the Sunshine Coast
By Leigh Martinuzzi | Martinuzzi Property Group – eXp Australia
The Reserve Bank’s final meeting for the year wrapped up with a widely expected outcome: no change to the official cash rate, which remains on hold at 3.6%. That said, inflation figures for October came in hotter than hoped, sitting at 3.8% annually with underlying inflation at 3.3%. This prompted a firm warning from the RBA that the battle against inflation isn’t over yet and we may not be out of the woods when it comes to further hikes in 2026.
While that kind of news might rattle confidence slightly, I think most buyers are now acclimatised to the new interest rate norm. Confidence has remained relatively strong, largely supported by the structural supply shortages we continue to face nationally and here on the Sunshine Coast. This week, Michael Yardney flagged some troubling trends in housing approvals, noting that dwelling approvals fell another 6.8% in October. That means approvals are now 26% below their 2016 peak which is a massive concern given our population continues to grow rapidly.
Vacancy rates across every capital city remain below 1.5%, despite a slight easing this year, and rents are still rising. It’s an indicator of a market where demand continues to outpace supply and one that’s putting immense pressure on both renters and first-home buyers. What’s particularly concerning is that this trend doesn’t look like reversing anytime soon. Building costs and planning bottlenecks remain obstacles to new supply, which means the same issues we’ve seen in 2025 could be even more pronounced by 2026.
Looking at prices, it’s clear we’ve had another strong year. Domain expects combined capital city price growth for 2025 to come in at 9% for houses and 7% for units. This marks Australia’s 11th consecutive quarter of house price increases, the longest streak since 2012–2015. House prices are now, on average, 50% higher than in 2019. That’s staggering growth by any measure. It’s also worth noting that the lower quartile of the market has outperformed this year, particularly supported by the government’s Home Deposit Guarantee and slightly easier lending conditions from mid-year rate cuts.
Auction clearance rates, however, have started to dip. Last week’s combined capital city clearance rate fell to 63.5%, the lowest since this time last year. Volume also dropped by 5.5%, showing that while buyer activity remains, some confidence has eased especially in the auction-heavy Sydney and Melbourne markets.
Here on the Sunshine Coast, we continue to see listing volumes remain below the 10-year average. While things have cooled slightly as we head into the holiday period, I’m still seeing strong buyer enquiry and good quality homes moving quickly. I expect this trend to continue through the summer and into early 2026, especially if interest rates remain stable. However, any surprise rate increase in the first half of the year could shake things up.
Council activity and infrastructure planning also continue to be key themes locally. While new development pipelines remain slow, we are watching closely for updates on local planning schemes and any rezoning that could open up more supply down the track.
As we head into the final few weeks of the year, I remain cautiously optimistic. Yes, affordability is stretched and market growth may taper as we head deeper into the cycle. But the fundamentals like low supply, high demand, and strong population growth remain firmly in place. I expect we’ll see another year of moderate growth in 2026 before things begin to stabilise more broadly.
If you’d like help navigating the market whether you’re buying, selling, or just planning ahead, feel free to reach out. I’m here to help however I can.
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