Small and mid-sized capital cities are still performing under the new government rules for property investment.

In his July 2026 Market Update, inSynergy’s Chief Economist, Dr Kevin Hoang, outlines the latest data showing a continued fragmented national market and the emerging trends.

July 2026 Property Market Update

The latest data reported by Cotality show that Perth, Hobart and Darwin continued to record value growth in July 2026, increasing in combined houses and units by:

• 0.1% in Perth; (0.1% for houses and 0.3% for units)
• 0.1% in Hobart; (0.2% for houses and -0.2% for units) and
• 0.8% in Darwin (0.7% for houses and 1.0% for units).

While the rate of growth across the mid-sized and smaller cities has decelerated, they are still holding or increasing in value, in contrast to highly geared, low-yield and high-vacancy-rate cities such as:

• Sydney (-1.7% for houses and -0.8% for units)
• Melbourne (-1.4% for houses and -0.7% for units); and
• Canberra (-1.2% for houses and -0.5% for units). 

There are also a few interesting observations that reflect the turning trends in Perth and Darwin.

The July growth rate of 1.0% in Darwin was higher than the average monthly growth of the last 3 months at 0.9%, suggesting that the pace of growth in Darwin has been accelerating as more buyers turn to the city for high rental yields and better affordability.

A similar trend is emerging in Perth, where house and unit values increased in July despite declines over the previous three months. 

Adelaide is also holding its unit values and recorded only a marginal decline in house values over the past three months.

Brisbane has also recorded only marginal declines, mostly driven by expensive segments in the city. 

Despite recent volatility, annual growth remains strong across our recommended unit markets, with robust 12-month growth rates recorded to date: 

• Darwin: 19.8% 
• Brisbane: 17.1% 
• Adelaide: 11.5% 
• Perth: 21.8% 

The national market has become more fragmented with emerging trends: 

• Sydney and Melbourne are now more exposed because they combine stretched affordability, higher debt levels, lower rental yields, and greater sensitivity to interest rate changes.  
• By contrast, Perth, Brisbane, Adelaide and Darwin remain better supported by stronger rental yields, tighter vacancy rates – all are below 1%, lower relative entry prices and stronger affordability compared with Sydney. These markets are not totally immune to higher rates or market sentiments, but they are in better position to weather the negative headwinds. 

Rental prices surged across the country

Treasury predicted that the policy changes would increase rents by only $2 per week. However, recent market data tells a different story. National rents have risen by 1.2% over the past three months, equivalent to an annualised growth rate of around 5%. If this pace continues, rents are projected to increase by approximately $35 per week by July 2027. 

One of the strongest drivers of rent growth is the tight rental market across the country. SQM Research reported a national vacancy rate of 1.3% in June 2026, with only 39,000 (vs 70,000 in normal time) vacant rental dwellings available nationwide. Vacancy rates across all capital cities remain below 2%, well under the 3% level typically considered indicative of a balanced rental market. 

The tightest rental markets are: 

• Darwin: 0.3% 
• Hobart: 0.7% 
• Adelaide: 0.7% 
• Perth: 0.6% 
• Brisbane: 0.9% 

Sydney and Melbourne are less tight, but still below balanced conditions, both at 1.6%. 

On top of the already tight rental market, the tax policy changes may contribute to higher rental prices over time. As investors adjust to the loss of tax benefits available under the previous rules, the increased cost of holding investment properties may be reflected in higher rents as landlords seek to maintain investment returns. 

Cash Rate Prediction 

The macroeconomic environment has improved this month compared with a few months ago, largely due to lower inflation data released last week. In the 12 months to June 2026, the Consumer Price Index (CPI) rose 3.8%, down from 4.0% in the 12 months to May 2026. Although inflation remains above the RBA’s 2-3% target range, the trend is more favorable for the RBA to keep the cash rate on hold at its August 2026 meeting. 

As of 3 August, financial markets were pricing in a 100% probability that interest rates would remain unchanged at the next RBA Board meeting. A stable interest rate environment is likely to boost buyer confidence and reduce distressed sales, supporting market sentiment and price growth in the coming months. 

What do the latest market trends mean for investors? 

We predict that different cities will perform quite differently in the coming months, depending on supply-demand dynamics, affordability, and market sentiment. However, the magnitude of any impact, as well as medium- to long-term growth prospects, will ultimately be determined by each city’s fundamentals, including housing supply, vacancy rates, population growth, and affordability. 

We also assess that our recommended cities, Perth, Adelaide, Brisbane and Darwin, continue to have strong long-term growth fundamentals, even if they experience short-term volatility. Delivering new housing in these cities remains a challenge, while demand continues to be strong. This should help support values during any downturn and provide a solid foundation for future growth. 

Table 1: Capital City Assessment

Source: Oxford Economics, SQM Research, Cotality and inSynergy’s Assessment