Market Market Brief: Interest Rates Back on the Move, Canberra Staying Steady

The Reserve Bank of Australia has lifted the official cash rate by 25 basis points to 3.85 per cent at its first policy meeting of 2026, the first increase in over two years. This decision was driven by persistent inflation above target and a resilient labour market.

Higher interest rates impact borrowing costs, buyer sentiment and housing market dynamics. In this updated brief we summarise what this means for the Canberra market, buyers, sellers and investors.

Canberra Market: Still Stable, But Rates are Now a New Reality

Canberra’s property market continues to show modest growth and resilience, even in the face of this rate shift. Recent dwelling value data indicate positive movement, particularly for houses versus units, reflecting local demand and supply conditions.

With the RBA’s rate rise now in play, borrowing costs will increase — and this is already being felt in broader markets. But Canberra’s steady fundamentals continue to support activity, provided buyers and sellers adapt their strategies to the new cost environment.

What the Rate Rise Means Nationally

The RBA’s decision reverses the cycle of cuts seen in 2025, signalling a shift in monetary policy. Interest rates at 3.85 per cent are now higher than many borrowers have seen in recent months, and banks are adjusting home loan pricing accordingly.

– Higher payments for variable rate borrowers are likely as banks pass on the increase.

– Some lenders had already begun lifting rates prior to the official rise.

– Elevated rates can dampen buyer confidence and reduce borrowing capacity in the short term.

This isn’t a market pivot overnight, but it reframes expectations — emphasising affordability and borrowing capacity as key influences on activity moving forward.

Canberra in Context: Stability in a Changing Environment

While national headlines focus on interest rate uncertainty, Canberra’s property market is not showing sharp volatility. The city continues to benefit from:

– Ongoing demand for well‑located properties.

– Relatively balanced supply compared with other capitals.

– Price growth that is modest rather than erratic.

Recent capital city housing data showed stronger growth at lower price points and continued competition among first‑home buyers — a trend relevant to parts of the Canberra market.

What This Means for Buyers, Sellers and Investors

Buyers: The increased cost of borrowing means purchasing power has tightened. Prepared buyers with pre‑approved finance and realistic expectations are best positioned to move when opportunities arise.

Sellers: Canberra remains a market where good preparation and accurate pricing matter more than ever. Homes that are well‑presented and aligned with market value are still attracting interest. Over‑pricing in a higher‑cost borrowing environment can lead to longer listing periods.

Investors: Higher rates can affect yield calculations and borrowing cost strategies. Investors should balance interest rate impacts with rental market strength and long‑term fundamentals rather than short‑term headline shifts.

Looking Ahead

With the RBA signalling that further rate movement is possible later in 2026, market participants should watch:

– Upcoming inflation and labour data.

– Lending cost adjustments from major lenders.

– Local supply developments, including land release and new construction.

In an environment where interest rates are no longer static, clarity of strategy and knowledge of local market nuances will be critical.