The Housing Market Is Shifting, Here’s What It Means for Your Loan
Australian housing market is going through a noticeable change right now. It’s not a crash. But it’s definitely not the same market it was 12 months ago, and if you’re thinking about buying, investing, or refinancing, it’s worth understanding what’s actually going on before you make your next move.
According to Commonwealth Bank economists, price growth has slowed, auction clearance rates have dropped, and homes are sitting on the market longer than before. That slowdown is being felt most sharply in Sydney and Melbourne, where prices are expected to decline further in the near term. Brisbane and Perth are holding up better, but even those markets are cooling compared to where they were.
Higher Rates Have Cut Borrowing Power
Three rate hikes from the RBA have done exactly what they’re designed to do, reduce how much people can borrow. For buyers, that means the loan amount you qualified for 18 months ago may look quite different today. For existing investors with variable-rate loans, repayments have gone up, and cash flow is tighter.
Budget Tax Changes Are Hitting Investor Confidence
The Federal Budget’s changes to negative gearing and capital gains tax have added another layer of uncertainty, particularly for investors with established properties. CBA’s own economists noted these changes are putting additional pressure on an already cautious market.
This Australian Housing Market Is Selective, Not Broken
Supply shortages are still a long-term issue across Australia. Construction costs remain high, and the pipeline of new homes isn’t keeping pace with demand. That means property values, even in softer markets, have a floor under them.
CBA economists are forecasting a stabilisation by early 2027, with potential RBA rate cuts in May and August of that year likely to restore some confidence. If that plays out, buyers who position themselves well now, with finance sorted and pre-approval in hand, could be in a strong spot.
If that happens, buyers who have already organised their finances, understood their home loan pre-approval position and prepared their borrowing capacity could be better placed to act.
As we covered in our earlier piece on why Australian housing market has paused, understanding the finance side is what separates buyers who move confidently from those who miss out.
The Bottom Line
The market is slowing, not collapsing. But slowing markets still move, and the buyers and investors who come out ahead are the ones who prepared their finances before prices and confidence turn back up.
Understanding your borrowing power, loan structure and available options before making a decision can put you in a stronger position.
We at OM Financials make the loan process simple and guide you every step of the way. If you’d like to understand your borrowing power in this market, or just want a second opinion on your current loan, reach out anytime. So, feel free to call us on 0478 876 967 or book your free consultation.
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FAQs
1. How is the Australian housing market affecting home loans in 2026?
Changes in property prices, interest rates and lending conditions can affect home loan Australia borrowers by changing borrowing capacity, repayments and the amount they may be able to borrow.
2. Should I check my borrowing capacity before buying a home?
Yes. Checking your borrowing capacity before starting your property search can help you understand your realistic budget and avoid looking at properties outside your financial position.
3. Is refinancing a home loan worth considering in 2026?
Home loan refinancing may be worth considering if your interest rate, financial circumstances or loan requirements have changed. However, you should compare the potential benefits with any refinancing costs before switching.