Sydney recorded the worst affordability reading among all capital cities at 40.4%, followed by Brisbane at 31.7%. Adelaide (28.0%), Perth (25.4%), Melbourne (23.9%), Hobart (23.3%), and Darwin (20.9%) recorded lower readings.
RBA rate rises fuel concern
The Reserve Bank of Australia (RBA) raised its policy cash rate by 25 basis points in both February and March 2026, bringing the rate to 4.1%, as it moves to contain resurgent inflation driven in part by a global energy crisis. Moody’s noted that the RBA had signalled further increases may be necessary to return inflation to its target range.
According to the report, if the cash rate reaches 4.6% and housing prices remain unchanged, the national affordability measure would worsen to 31.0%. Should housing prices also rise by 6%, the measure would climb further to 32.9%.
Supply squeeze keeps prices elevated
Despite the rate environment, Moody’s said it expects housing prices to remain broadly elevated through 2026. The agency cited sustained population growth from migration, combined with tight housing supply, as factors keeping demand strong. ABS data cited in the report showed new dwelling construction across major states has remained low relative to population growth, with high construction costs limiting new builds.
Moody’s added that the Melbourne property market is likely to continue to lag other major cities, even as the broader national market holds firm.