Interest Rate Impacts: What Brisbane’s Housing Market Is Telling Us About 2025-2026

Brisbane’s property market continues to show resilience and growth potential as we look towards 2025-2026, with interest rates playing a pivotal role in shaping the landscape. Recent developments in inflation have heightened expectations for an imminent rate cut, which could significantly influence market dynamics.

Market Outlook

According to SQM Research’s annual Christopher’s Housing Boom and Bust Report for 2025, Brisbane homes are expected to see a price increase of 9 to 14 percent in 2025. This translates to a potential rise in median dwelling prices between $77,000 and $120,000. The impact of interest rates on this growth may or may not be substantial, depending on other market forces. Domain is tipping that Brisbane’s median house price will hit $1,000.000 in 2025. SQM Research Managing Director Louis Christopher told API Magazine that growth will be underpinned by strong migration and robust employment. It is important to note that there are markets within markets and prices will not move evenly across Greater Brisbane.

Interest Rate Expectations and Market Signals

The potential for an interest rate cut of 0.25% this month is now being widely anticipated due to recent improvements in inflation. This development is likely to fuel optimistic market predictions and could lead to increased buyer activity.

Key market signals include:

• Resilient Demand: Despite higher interest rates in 2023-2024, Brisbane’s property market has shown remarkable resilience, indicating significant growth potential when rates ease.
• Supply-Demand Imbalance: The current undersupply of housing, coupled with strong population growth, suggests sustained upward pressure on prices.
• Interstate Migration: Despite rising prices, Brisbane’s lifestyle appeal and strong job market continue to attract interstate migrants, particularly from Sydney, supporting price growth.

Market Performance

Brisbane’s dwelling values rose by 0.5% in December 2024, contributing to a 1.3% increase over the last quarter and an 10.2% annual gain. This positions Brisbane as one of the stronger-performing markets in Australia, outpacing Sydney and Melbourne.

The median house price in Brisbane reached $977,575 in January 2025, with 0.4% growth over the month and a 10.2% annual increase. Meanwhile, the unit market has shown accelerated growth, with the median unit value now at $680,893, reflecting a 0.8% monthly increase and a substantial 16.6% annual rise.

First-Home Buyers and Lower Price Sector

The lower price sector of Brisbane’s property market is showing significant activity, particularly among first-home buyers:

1. The lower quartile of Brisbane’s market continues to outperform, driven by heightened demand from first home buyers and investors seeking affordability.
2. Apartment prices are forecast to rise faster than house prices, potentially creating opportunities for first-home buyers.
3. The median unit price has risen significantly from $450,000 in 2021 to $680,893 in January 2025, indicating strong growth in the more affordable segment of the market.

Investor Activity

Investors are particularly active in Brisbane’s market, drawn to the city’s combination of lifestyle appeal, major infrastructure projects, and strong rental yields. Units are attracting investor attention due to their higher gross rental yield and consistent demand.

Rental Market

Brisbane’s rental market remains exceptionally tight, with vacancy rates at 1.1% as of November 2024. Annual rental price trends indicate rising rents, with median weekly rents for houses surpassing $600 and units averaging $500 as of late 2024.

Looking Ahead

As we move through 2025 and into 2026, Brisbane’s property market is expected to outperform most other capital cities. The anticipated interest rate cuts in the coming months could provide a significant boost to buyer confidence and borrowing power, potentially stimulating renewed demand.

Key factors shaping Brisbane’s market include:

• Population Growth: Brisbane is growing fast, with a projected 1.8% annual increase in population, driven mainly by interstate migration.
• Infrastructure Development: Major projects like the Cross River Rail, Brisbane Metro, and preparations for the 2032 Olympics are transforming the city and boosting property values in surrounding areas.
• Urban Renewal: Suburbs undergoing urban renewal and gentrification tend to outperform, attracting more affluent residents and boosting demand for housing and rental properties.

The consensus among experts is that Brisbane’s growth story is far from over. With continued population growth, ongoing infrastructure development, and the potential for interest rate cuts, the city’s property market is well-positioned for sustained growth into 2026 and beyond. For those looking to enter the market or expand their portfolio, the potential rate cuts in the coming months present a timely opportunity. However, as always, careful consideration of individual circumstances and expert advice remain crucial for making sound investment decisions in this dynamic market.