Rates Rises are Back

Here's How Your Property Survives (And Thrives)

It can be overwhelming at the best of times when you’re entering the property market - whether it’s your first purchase or your tenth! When interest rates are rising and property prices keep grinding higher, along with the cost of living, it’s easy to lose your property mojo and start second guessing your every move.

Keep this in mind…

American investor, philanthropist and the world’s ninth wealthiest person, Warren Buffet, is famous for this line:

“Be fearful when others are greedy, and greedy when others are fearful.”

In other words, the smart money looks for opportunity where others only see pain.

So with that in mind, here are some practical tips to help you navigate your property journey in these uncertain times.

FOR FIRST HOME BUYERS

Acknowledging how hard it is

If you’re not in the market yet, the past few years have felt like running up a down escalator. Every time you move closer, the market seems to move away again. That frustration is valid.

You’re facing a brutal combination of:

• prices that are nationally higher than the last rate hike cycle

• borrowing capacity that is lower because of higher assessment rates

• rising living cost assumptions built into lenders’ calculations

Even though growth is expected to stablise in 2026, many

forecasters still see another 4-7% price rise across several

capitals as strong demand and tight supply continue to

collide.

On the ground, that often means:

• More competition for anything remotely affordable, especially units and townhouses.

• First home buyers going head to head with investors again as rental yields improve.

• A creeping fear of “if I don’t buy soon, I might never catch up” tempting buyers to stretch beyond their comfort zone.

  
  

It’s important to recognise…

If you’re struggling to make the numbers work, that’s not a personal failing. The system has shifted under your feet.

The goal is not to give up, however to be very specific about what’s realistic for you- even if it looks different to the dream home you had in mind.

That may mean:

• Targeting an entry level property (often a unit or townhouse) in a well located suburb with good fundamentals.

• Considering ‘rentvesting’. That is to rent where you would prefer to live and buy where you can afford - if it fits your risk profile and lifestyle.

• Making use of the government low deposit and shared equity schemes that can legitimately shave years off the deposit journey.

Our finance team can model these options side by side so you see the trade offs more easily, rather than guessing based on headlines or social media.

INVESTORS

Should you be worried about a crash?

Every cycle, there’s a fresh set of predictions that “this time is different” and that a big fall is imminent. So far, the data says otherwise.

• National prices rose strongly in 2025 and continued to edge higher into early 2026, even as inflation surprised on the upside and talk of more hikes intensified.

• Many economists are now tipping slower growth (low to mid single digit gains) rather than widespread falls, assuming unemployment doesn’t spike. Ongoing supply shortages, strong rental demand and population growth are key stabilisers.

The consensus from mainstream forecasters points to moderation and more patchy outcomes between markets, not a sharp nationwide collapse.

Not every property will do well, of course. The bigger risk for investors is over gearing into the wrong asset:

• poor quality units

• compromised locations

• buildings with big remediation risks

then struggling to hold through a flat or slightly weaker period.

What it would actually take to see a crash

A genuine housing crash (not just a wobble or a few soft years) usually needs several things to go wrong at once:

• sharp rise in unemployment so many borrowers simply can’t meet repayments

• banks tightening credit hard so refinancing and restructuring aren’t an option

• a flood of distressed listings hitting the market when buyers are scarce, forcing rapid price cuts as sellers undercut each other.

Right now, that full combination isn’t in play. The labour market has softened around the edges but remains relatively strong and banks are still assessing borrowers with sizeable interest rate buffers. That doesn’t remove risk, however it does make a disorderly wave of forced selling less likely, especially when most owners have enjoyed strong nominal gains in recent years.

Why the long term view still matters

None of this guarantees that “property always goes up”. Prices can fall in real terms and some suburbs can underperform for long stretches.

However, if you zoom out beyond the latest rate decision, Australia’s big picture is familiar:

• strong population growth, especially into the capitals

• structural undersupply in many segments, worsened by construction delays and high construction costs

• tax and policy settings that still favour property as a long term wealth vehicle.

For owners and investors with:

• sensible levels of debt

• a decent cash buffer

• a time horizon measured in decades rather than months

that backdrop remains broadly supportive.

For aspiring buyers, it means that waiting for a crash as your only strategy is risky. The bigger win is usually becoming clear on what you can safely afford, then acting when the right property and lending structure line up - even if rates aren’t back at the levels we all enjoyed in 2021.

What to do next

If you’re:

• An owner feeling the squeeze Now is the time to review your rate, your product structure (fixed vs variable, splits, offsets) and your budget, not three rate rises from now. Small changes can meaningfully improve your resilience.

• An investor Focus on quality assets, conservative buffers and realistic rent and expense assumptions. Don’t let FOMO push you into marginal deals that only work at last year’s rates.

• A would be first home buyer Allow us to model your numbers properly. That means testing your borrowing power at today’s rates plus a buffer, mapping out the deposit and costs, and comparing buying now versus waiting scenarios so you can make a deliberate, informed decision rather than an emotional one.

If you’d like help pressure testing your position (from stress testing your current loan to mapping out your first purchase or next investment) reach out and we can step through the numbers together.

Having clarity doesn’t change the interest rate, however it does change how much control you feel over your next move. Reach out for a fresh look at your finances.

If you'd like help with assessing your personal and financial situation, as well as comparing the loans in the market to see if you're truly getting the right deal for you, then call Bob Malpass now on 0431 862 136, email bob@westhomeloans.com.au