FEAR & GREED | Business News Q+A: Can house prices keep climbing if rates rise?
Jan 22, 2026
Dr. Nicola Powell, Chief of Research and Economics at Domain, shares her insights on Australia’s housing market, which has seen 12 consecutive quarters of growth. She highlights Melbourne’s resurgence driven by increased borrowing capacity and first-home buyer demand. Powell explains why Perth has transformed into a million-dollar city, linking it to mining and migration trends. The discussion includes the structural shifts in pricing across cities and how ongoing supply constraints will influence future price trends, despite potential rate hikes.
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Record Long Price Growth Run
- Australia has recorded 12 consecutive quarters of house price growth, the longest run in over a decade.
- Domain's December quarter report shows house and unit prices reached record highs despite recent rate cuts and policy moves.
Rate Cuts And Guarantee Scheme Lift Demand
- The three rate cuts in 2025 and the expanded home guarantee scheme boosted buyer confidence and demand.
- Lower-end housing particularly benefited as first-home buyer demand and investor activity rose before scheme changes.
Melbourne's Catch-Up Surge
- Melbourne lagged earlier in the cycle but has now reached a new record after buyers moved to capture perceived value.
- Relative affordability versus Sydney and improved borrowing capacity pulled first-time buyers and upgraders back in.