Property Talk: February, 2026 - The Rate Hike That Shocked No One

5 Feb 2026 Posted By: Greg Cahill

So, the Reserve Bank finally hiked the official cash rate this week. If you were paying any attention to the economy, you wouldn't be surprised. Honestly, any headline screaming "Shock Rate Rise" is just clickbait nonsense. The signs have been crystal clear for ages, driven by inflation that just won't quit and a job market that's still surprisingly strong.

What's Next? We reckon the RBA isn't done. The general vibe in the market (and what our own analysis suggests) is that at least one more rate rise is probably coming. They might hit pause for a bit after this one to see how things shake out, but the basic economics suggest they'll need to do more to get inflation back into the comfort zone.

Why Property Demand Isn't Going to Fall Off a Cliff

You might think higher rates would kill property demand, but we'd advise against expecting a massive crash.

Why It's So Sticky: While borrowing costs are definitely eating into what people can afford, a few big factors are keeping the market surprisingly lively:

  • Not Enough Stock: We just don't have enough houses available, especially in the spots where everyone wants to live. This scarcity acts like a safety net for prices and keeps buyers fighting for what's there.

  • New Builds Are Costly: This is a big one. It's gotten incredibly expensive to build a new home, thanks to supply chain headaches, builder shortages, and rising material costs. So, buying an existing place, even at today's prices, often feels like a quicker, easier, and sometimes cheaper option than starting from scratch. This is what's keeping established homes so popular.

Bottom line? The frantic energy of the peak boom is likely to fade, but the underlying demand—thanks to population growth and the sheer cost of building anything new—is likely to keep the established housing market ticking along nicely.

Capital Gains Tax Discount: A Major Watch Item

For investors, the most critical policy to watch is the growing push to cut back the Capital Gains Tax (CGT) discount.

The Drill: Right now, if you hold an asset (like an investment property) for over a year, you only pay tax on half the profit (50% discount). There's serious noise—not just idle talk—from different groups and politicians about either shrinking that discount (say, to 25% or 33%) or getting rid of it entirely for investment properties.

Investor Impact: This isn't just political theatre you can ignore. If they legislate a change to the CGT discount, it will fundamentally change how profitable an investment property sale is after tax. If you're planning to sell an investment property in the next few years, the exact timing of that sale could become a huge financial decision.

Get Expert Advice NOW: Selling before any change becomes law could save you a significant chunk of tax compared to selling after the change. Investors absolutely must talk to their financial advisor or accountant immediately. Get them to crunch the numbers on how a reduced CGT discount would hit your personal portfolio and work out a proactive plan. The window for the best tax outcome might be closing fast.