Inflation is picking up again and the market is starting to price in a near-term interest rate hike. That single shift is enough to change the mood fast: buyers pull back, auction crowds thin out, and “should we wait?” becomes the default question at open homes.

Higher rates don’t just affect repayments. They cut borrowing power, tighten lending, and knock confidence, especially for buyers stretching to compete in Sydney and Melbourne. When money gets more expensive, urgency fades. The heat goes out of bidding wars, and the market starts rewarding patience and preparation instead of speed.

If you’re buying in 2026, the advantage sits with buyers who are organised and realistic: clear budget buffers, suburb-level research, and a plan for negotiation. And if you’re using a buyer’s agent, this is when it really pays to compare them properly by their local track record, fee structure, and strategy, not by hype.

What the latest inflation data is really saying

Headline inflation vs the “underlying” number

The headline inflation rate is the one that gets the big headlines. It’s the full basket of prices, including items that can jump around month to month. Think fuel swings, seasonal changes, or one-off price shocks. It matters, but it can be noisy.

That’s why economists and the Reserve Bank of Australia also focus on “underlying” inflation, often discussed as the trimmed mean. This measure strips out the most extreme price moves on both ends, so you get a clearer view of what inflation is doing across the broader economy. In plain terms: it’s the steadier signal, and it’s harder to ignore when it starts rising.

The target band matters because it’s the RBA’s scoreboard. Their job isn’t to get inflation “down a bit”; it’s to keep inflation sustainably within the target range over time. When underlying inflation drifts above where they’re comfortable, the bank is more likely to lean on interest rates to cool demand.

Services inflation is the pressure point

Goods prices can cool quickly when supply chains improve or discounts kick in. Services are different. Services inflation tends to move with wages, demand, and how confident households feel. It’s the day-to-day stuff: health, education, insurance, hospitality, personal services.

When services inflation rises, it can be a sign the economy is still running warm. People are still spending, businesses can still push through higher prices, and demand is strong enough to absorb it. That’s why policymakers watch it closely. If services inflation keeps lifting, it suggests price pressure is sticking around, even if some goods get cheaper. And that’s the kind of signal that can push the conversation from “rate cuts are coming” to “rate rises might be back.”

Jobs are the second half of the rate story

Low unemployment reduces the “risk” of tightening

Inflation is only half the story. The other half is jobs. When unemployment is low and employers are still hiring, it tells the RBA the economy can handle a bit more pressure. In that setup, lifting rates doesn’t look like an instant threat to employment. It looks like a way to cool spending and bring inflation back under control.

That’s why labour force figures matter so much. The RBA leans on official data from the Australian Bureau of Statistics, especially employment growth, participation, and the unemployment rate. If those numbers keep showing a tight market, it’s harder to argue rates are already doing enough work.

The simple takeaway for buyers: when jobs are strong, the RBA has more freedom to move rates up if inflation won’t settle. That’s exactly the mix that can reset expectations in property, even before a rate decision actually lands.

Markets react fast when the narrative shifts

Property moves slowly, but markets move in seconds. The moment a big inflation or jobs print surprises, expectations jump first. Traders reprice the outlook, the dollar can move, and fixed-rate funding costs shift. That flows through to lenders updating their forecasts and, sometimes, tweaking pricing.

What higher rates usually do to housing

Borrowing power gets clipped

Even a small rate rise can bite because it hits the maths lenders use to assess your repayments. If your interest rate goes up, your maximum borrowing amount often goes down. That doesn’t mean every buyer disappears overnight, but it can cap prices at the margin, especially in markets where buyers were already stretching.

You’ll usually see this show up as buyers trimming their expectations: the “dream suburb” becomes the “next suburb over”, the freestanding house becomes a townhouse, or the renovated home becomes the one that needs a bit of work. When enough buyers make those trade-offs, the top end of demand softens and price growth can slow.

Confidence cools before prices do

Housing doesn’t flip like shares. Prices can take months to reflect a mood change, but the behaviour shift can happen straight away. “Wait and see” looks like this:

• fewer active bidders at auctions

• more people inspecting but not offering

• buyers taking longer to decide

• more conditional offers (finance clauses, longer settlement, building and pest conditions)

• vendors needing extra weeks to meet the market

In practical terms, urgency fades. That’s when negotiation starts working again, but only if you’ve got finance ready and you know what you’re buying.

Supply still matters

Rates matter, but supply can matter more. If listings are tight and there’s a genuine housing shortage, prices don’t always fall just because rates lift. What often happens instead is the market cools unevenly: some suburbs stall, others keep moving because there simply aren’t enough good properties to go around.

This is why broad “prices will crash” takes usually miss. The real story is suburb-by-suburb. In undersupplied pockets with strong fundamentals, a rate rise might only take the heat out not push values down. For buyers, that means you can’t rely on headlines. You need local evidence, and that’s where comparing buyer’s agents by suburb focus and recent buying experience becomes a real advantage.

City-by-city: who feels it most in 2026

Sydney and Melbourne

These two are usually the first to feel higher rates because the average loan sizes are bigger and affordability is already tight. When borrowing power drops, buyers in Sydney and Melbourne often have less room to “just pay a bit more”, so demand can soften quickly. That’s why a rate-rise scare can lead to softer months: more pass-ins at auction, more price negotiations, and more buyers sitting on their hands waiting for clarity.

For buyers, this can be a window. Less competition can mean better terms and more time to do proper due diligence. The catch is you still need to be suburb-specific. Some pockets hold up because stock is limited or demand stays deep, while others cool fast. This is exactly where a buyer’s agent’s local track record matters, not their general “market view”.

Brisbane, Perth and Adelaide

These markets can still be supported by tight supply and strong underlying demand, even when rates lift. But the pace can slow if finance tightens and confidence wobbles. In plain terms: they don’t need to fall for the story to change. If growth has been running hot, a rate rise can turn “rapid gains” into “steady gains” or a short pullback while buyers reset their budgets.

The practical move here is to focus on quality and scarcity. When the market cools, buyers start caring more about fundamentals: land component, layout, transport, schools, and rental demand. If you’re using a buyer’s agent, you want one who can explain street-level selection, not just city-level optimism.

Darwin and Hobart

Smaller markets can behave differently because investor motivations change when rates rise. If borrowing becomes harder and growth slows in the big capitals, some buyers start chasing yield to keep their numbers working. That can rotate attention into smaller capitals and selected regional areas, especially where rents are strong relative to purchase prices.

That doesn’t mean “everything goes up”. It means the buyer mix can shift. More yield-focused buyers often equals more interest in certain property types and price points, while other segments stay quiet. If you’re considering these markets, the margin for error is smaller, so you need sharper research and a clear plan on resale and tenant demand.

Callout box: Rent vs buy tipping points

In some suburbs, owning can look cheaper than renting on a weekly basis, especially if rents have surged. But don’t stop at the mortgage repayment. Ownership costs still apply: council rates, insurance, maintenance, strata (if relevant), and a buffer for rate changes. The right comparison is total cost of ownership versus rent, not just the headline repayment.

If you’re buying now, here’s the smart playbook

Lock in finance certainty

When rates look shaky, certainty is your superpower. Start by building a buffer into your budget — not just “can we afford it today?”, but “can we afford it if repayments rise again?”. That buffer gives you breathing room and stops you making panicked decisions mid-negotiation.

Next: get proper pre-approval (not a quick calculator estimate). In a cooling market, being ready to move matters because good properties still get competition. And keep a Plan B property type in your pocket. If your borrowing power gets clipped, you don’t want to restart from scratch — you want an alternative that still fits your goal (eg townhouse instead of freestanding, or a neighbouring suburb with similar fundamentals).

Buy with a “must-have” checklist, not hype

This is where buyers get caught out: the market feels uncertain, so they either freeze, or they buy the first thing that “seems okay”. A simple checklist keeps you steady.

Pick five non-negotiables and stick to them. For example:

• commute time or key transport links

• school catchment (if relevant)

• land component or scarcity factor (even for townhouses)

• strata limits you’re comfortable with (fees, rules, special levies)

• renovation tolerance (none, light cosmetic, or full project)

Once those are clear, it’s easier to say “no” quickly, and that’s often what protects your returns.

Negotiate like the market has changed

In a hotter market, buyers win by moving fast. In a softer market, buyers win by being organised and flexible. Go in with two or three offer strategies so you’re not winging it under pressure.

Good options to prepare:

• Clean offer: strong price, fast terms, minimal conditions (best for scarce, high-demand properties).

• Terms-led offer: longer settlement, rent-back, or flexible dates (often attractive to vendors even without paying top dollar).

• Risk-managed offer: subject to finance, building and pest, or other sensible clauses (useful when uncertainty is high, but keep it tight so it’s still credible).

The point isn’t to lowball everyone. It’s to match the offer style to the property, the vendor, and the moment. And if you’re using a buyer’s agent, this is exactly what you should be comparing them on: how they handle negotiation when the market mood shifts, not just when everything is booming.

How to choose a buyer’s agent in a rising-rate market

When rates look like they’re heading up, the margin for error shrinks. Overpaying hurts more. Holding costs sting more. And “close enough” properties can become regrets fast. If you’re going to pay for help, this is the moment to be picky and to compare agents in a way that matches how you actually want to buy.

BuyerAgentFinder exists for exactly this: helping you compare buyer’s agents side-by-side so you can choose the right fit for your suburb, budget and strategy.

Compare by fit, not fame

A popular name isn’t the same as the right buyer’s agent for your brief. In a rising-rate market, you want someone who can keep you calm, protect your downside, and move quickly when the right property appears.

Here’s what “fit” looks like:

• Local buying record in your target suburbs

  Ask for recent examples that match your price range and property type. “We buy in Sydney” is too broad. You want street-level confidence.

• A clear process for shortlisting and rejecting bad deals

  The best agents don’t just find properties — they save you from the wrong ones. Look for a method: filtering criteria, checks, and red flags they won’t compromise on.

• Negotiation skill that suits how you’ll buy

  Auction-heavy strategy is different to private treaty. Make sure they can explain how they win in your likely buying environment, not just in a boom.

• Fee structure and inclusions that match your needs

  Clarify what’s actually included: search, inspections, due diligence coordination, bidding, negotiation, and post-contract support. If it’s vague, assume it’s missing.

Fees: fixed vs percentage, and what’s “normal”

Buyer’s agent fees are commonly charged as either a fixed fee or a percentage of the purchase price. You’ll see both in Australia, and neither is automatically better.

• Percentage fees are often quoted around the low-to-mid 2% range (sometimes more, sometimes less), usually with a minimum fee.

• Fixed fees often sit in the five-figure range, varying by city, price point and service depth.

The key is to map fee to scope. A lower fee can be great if it still includes real due diligence and hands-on negotiation. A higher fee can be worth it if the agent is genuinely strategic, suburb-specialised, and saving you time and mistakes. What you want to avoid is paying premium fees for a thin service that’s basically a shortlist and a few phone calls.

A simple rule: if two agents charge similar money but one can clearly explain their process, risk checks, and negotiation approach, that’s usually the better bet.

The independence check

Independence matters more than most buyers realise. You want your buyer’s agent aligned with you — not quietly incentivised by someone else.

Ask directly:

• Do you accept referral fees or kickbacks from selling agents, developers, or marketers?

• Do you have any relationships that could influence what you recommend?

And ask the blunt one: “Who pays you, and when?”

A good answer is clear, simple, and doesn’t get defensive. If the answer feels slippery, treat it as a red flag.

10 quick questions to ask before you sign

Use these in your first call or meeting. They’ll sort the solid operators from the smooth talkers quickly.

1. Which suburbs have you bought in recently that match my budget and strategy?

2. How do you shortlist, and how often do you say “no”?

3. What’s your plan if prices soften after a rate rise?

4. Do you focus on auctions, private treaty, or both?

5. What’s included in your fee (inspections, due diligence, bidding)?

6. Fixed fee or percentage, and why is that fair for my brief?

7. Do you accept any referral fees or kickbacks from selling agents?

8. How do you source off-market opportunities, and how often does that actually happen?

9. How will we communicate week-to-week, and what’s a realistic timeline?

10. What are the exit terms if it’s not working?

If an agent can answer these confidently, with specifics, you’re on the right track. If they can’t, you’ve just saved yourself a costly mistake before you even start house-hunting.

Next step: compare buyer’s agents side-by-side

Want to compare buyer’s agents before you buy in 2026?

BuyerAgentFinder helps you compare buyer’s agents by local expertise, fee style, and approach, then shortlist the ones that suit your suburb and strategy.