This week’s interest rate rise has sparked a familiar question across Australia.

Will property prices fall from here, or will the market keep pushing higher

The Reserve Bank of Australia lifted the cash rate by 0.25 percent to 3.85 percent. RBA Monetary Policy Decision February 2026

For context on how the cash rate works and updates over time, see RBA Cash Rate Target Overview.

The short answer is this

A rate rise can cool price growth, and in some pockets it can lead to price falls, but Australia does not move as one market. The outcome depends on local supply, local demand, affordability, and how sellers respond.

Below is what the data suggests right now, what usually happens next, and what sellers and buyers should watch in the coming weeks.

Why a rate rise can cause prices to fall

Interest rates affect property prices mainly through borrowing power and buyer psychology.

When rates rise, some buyers can borrow less than they could previously. That often reduces competition, especially in higher price brackets where buyers are closer to their limits.

The RBA has linked this decision to inflation pressures, with inflation still above the target band. ABS Consumer Price Index December 2025
Reuters also reported the rate move as the first hike in two years, driven by persistent inflation and stronger activity. Reuters report on the RBA rate rise

In plain terms, higher rates usually mean

• Some buyers pause
• Some buyers reduce budgets
• Negotiations get tougher
• Days on market can lengthen in certain suburbs

That is the pathway that can lead to softer prices.

Why prices do not always fall after a rate rise

Even when rates rise, prices do not automatically drop. That is because the market is also driven by supply and demand.

If listings are limited and buyer demand stays strong, prices can hold up, or still rise, even with higher rates.

This is one reason Australia often experiences a slowing in growth rather than a sudden drop.

Recent market reporting has pointed to resilience in activity, including auction clearance strength early in the season. Cotality CoreLogic auction season update

What the current market data suggests

The key signal to watch after a rate rise is not just the rate itself, it is whether demand fades faster than supply.

Here is what the latest public data is indicating.

Prices were strong through 2025, but 2026 may be softer

Cotality CoreLogic noted that 2025 delivered strong housing gains, while 2026 was shaping as a softer landing amid affordability pressures and renewed rate fears. Cotality CoreLogic Home Value Index commentary

This supports a common pattern after a rate rise

Growth slows first
Falls happen later only if supply rises or demand weakens sharply

Some forecasts still expect growth, but it may be uneven

Domain has published forecasts that still point to continued increases across 2026, though outcomes differ by city and property type. Domain Australian property price forecast 2026

Even within the same city, the direction can vary suburb to suburb.

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What usually happens next after a rate rise

Historically, after a rate rise, markets tend to move through three phases.

Phase 1: Buyers slow down, not disappear

Buyer activity typically becomes more cautious. People still inspect and still buy, but they take longer and become more selective.

Phase 2: Sellers adjust expectations

If a property is overpriced, it sits longer. Price expectations start to shift, especially for homes that need work or are not positioned well.

This is where some sellers end up reducing price guides, or accept lower offers.

Phase 3: The market splits into two speeds

In almost every cycle, the market becomes more uneven.

Homes that are well located, well presented, and correctly priced can still sell strongly.

Homes that are poorly marketed, overpriced, or less appealing can sell for less, or take much longer.

Where price falls are most likely

If prices fall, it usually happens first in areas where affordability is already stretched and demand is more rate sensitive.

Common examples include

• Locations where listings rise quickly
• Homes that need renovations in a cautious buyer environment
• Apartments in areas with lots of competing stock
• Higher priced suburbs where borrowing power matters more

This does not mean these markets collapse. It means they become more price sensitive.

What buyers should watch right now

If you are buying, the smartest move is to track the local indicators, not national headlines.

Here are the signals that matter most

• Days on market increasing in your suburb
• More listings coming online
• Fewer bidders at auctions
• Price guides being reduced
• Vendor discounting rising

If those start to trend up, it can signal a softer market.

What sellers should do if they are listing in 2026

If you are selling in the coming weeks or months, the goal is to avoid being the listing that sits.

In a rate rise environment, your outcome is driven by strategy.

That means focusing on

• Pricing correctly from day one
• Strong presentation and first impressions
• Professional marketing
• Choosing an agent who can negotiate confidently

A rate rise does not stop good results. But it makes execution more important.

How AgentChoice helps in a changing market

At  AgentChoice®,we connect homeowners with the top 3 performing agents in their local area, so you can compare strategy, experience, and results before choosing who to represent you.

In markets shaped by interest rates, the right agent can make a measurable difference through

• Better pricing strategy
• Stronger marketing plan
• Better buyer management
• Stronger negotiation outcomes

If you want a clearer view of your local market position before making decisions, start here.

The bottom line

Will property prices fall after this week’s rate rise

Some areas may soften, and some segments may see minor declines, but broad outcomes will vary suburb by suburb.

What the latest data suggests is a more likely scenario of

Slower growth first
More negotiation
Greater market unevenness
Falls only where affordability and supply pressures outweigh demand

If you want to make the right move in 2026, focus on local data, and compare the strategies of the best agents before committing.