Key takeaways
Vacancy rates fell in October in 13 of the 16 capital city house and unit markets.
Rents rose in only three of those 16 markets over the month, fell in five and held steady in eight.
Darwin remains the strongest rental market over the year, with house rents up 11.1% and unit rents up 15.0%.
The RBA lifted the cash rate to 4.85% on Melbourne Cup Day, the fifth rise of 2026 and the highest level since November 2008.
Annual headline inflation is 4.3%, underlying inflation is 3.6% and the RBA doesn't expect inflation to reach the top of its 2-3% target range until late 2027.
Melbourne topped the auction markets at the weekend with a 62.1% clearance rate from 629 auctions, while Sydney slipped to 52.7% from 964 auctions.
Australia’s rental markets are tightening again, even though October’s asking rents offered tenants a little breathing space in several capitals.
Meanwhile, another interest rate increase is adding to household pressures, with the Reserve Bank warning that inflation will take longer to return to target.
Yet the weekend’s auction results were reasonably steady, and Melbourne once again recorded the highest clearance rate among the capitals.
In this week's Property Insiders, Dr Andrew Wilson and I look at why vacancy rates are falling while rents have stalled, what the RBA's fifth rate rise of the year could mean for the months ahead, and how auction markets held up at the weekend.
As always, we've tried to cut through the noise and focus on what these numbers really mean for you as a long-term property investor.
Rental markets tighten, but rents take a breather
Watch this week's Property Insider chat as Dr Andrew Wilson discusses his latest Capital City Home Rent Report, which shows rental markets generally tightened over October, after vacancy rates had eased in previous months.
The unusual part of this month's numbers is that rents didn't respond, with asking rents rising in just three of the 16 capital city house and unit markets.
It is possible that tenants’ stretched budgets may be limiting how quickly rents can rise, even where available homes remain scarce.
Darwin was the only capital to record higher house rents over the month, up 3.3% to $850 a week, while Sydney house rents fell 1.2% to $855.
Sydney is still the most expensive capital for house rents, and Melbourne remains the most affordable at a steady $600 a week.
House vacancy rates are below 1% in six of the eight capitals, and Hobart is the tightest at just 0.4%.
Units followed a similar story, with Brisbane up 3.6% and Hobart up 1.2% as the only increases over the month, while Melbourne slipped 0.8% and Adelaide fell 0.9%.
Andrew expects reduced migration and fewer overseas students to take some demand out of the rental market.
He also expects fewer residential investors and stagnant new supply to keep upward pressure on rents and downward pressure on vacancy rates over the longer term.
The investor side of that equation is already showing up, with ABS figures revealing investor loan numbers fell 8.6% in the June quarter, the largest fall since the September quarter 2022.
With restrictions on negative gearing for established properties due to begin in July 2027, I wouldn't be surprised to see that trend continue, and every investor who stays out of the market is one less landlord providing a rental home.
The RBA lifts rates again as inflation stays too high
Watch this week's Property Insider chat as we discuss how on Melbourne Cup Day, the Reserve Bank raised the cash rate by 0.25 percentage points to 4.85%, taking it above the 4.75% peak of 2010-11 and to its highest level since November 2008.
It was the fifth rate rise of 2026, following increases in February, March, May and September, although the decision was far from unanimous, with six board members voting to raise rates and three preferring to hold at 4.60%.
The trigger was the latest inflation data, with annual headline inflation climbing to 4.3% in September and underlying inflation, the trimmed mean, sitting at 3.6%.
In its statement, the RBA said inflation was elevated and broadly based, and that its outlook had been revised materially higher, partly due to higher fuel and other commodity prices.
It also said many businesses are facing cost pressures and are either lifting prices or looking to do so.
The board now doesn't expect inflation to reach the top of its 2-3% target range until late 2027, and it's concerned that inflation expectations could rise further.
At the same time, it expects unemployment to rise more than it previously forecast, which shows how tricky the balancing act has become.
For borrowers, Canstar estimates the latest rise adds about $107 a month to the repayments on a typical $700,000 loan, and about $537 a month across all five rate rises this year.
The big question now is whether this is the peak, and while the experts are divided, both Dr Andrew Wilson and I believe we are at the peak of interest rates, unless something else significant crops up.
- Also read:Vacancies fall, rents stall and rates hit an 18-year high: what Australia’s latest property data is telling us | Property Insiders
- Also read:Australian housing market update | November 2026
- Also read:This week’s Australian Property Market Update – Latest Data, State by State November 10th 2026
- Also read:National Weekly Auction Report – November 7th 2026 | Steady Auction Results Despite Yet Another Interest Rate Rise
- Also read:National Property Listings Surge Past 300,000 in October | Latest SQM Listing Data
| Forecaster | Latest view on interest rates |
| NAB | Expects the RBA is likely to pause after November |
| Westpac | Sees a higher risk of another rise, most likely in February, but hasn't added it to its forecast |
| CBA | Hasn't ruled out further rises and has penciled in cuts for August and November 2027 |
| ANZ | Sees a material risk of 5.10% in December or February |
I've been around long enough to know that nobody can pick the peak with any certainty, so I wouldn't build your financial plans around anyone's forecast, including mine.
What I'm watching closely is the split on the board, because three members were already prepared to hold, and interest rates are now well above the RBA's estimated neutral level of around 3.4%.
My sense is that we're closer to the end of this tightening cycle than the beginning, but it would be sensible to make sure your finances can handle at least one more rise.
Auction markets hold steady, and Melbourne still leads
In this week's video, Andrew describes the first weekend of November as reasonably steady, despite the auctions coming only days after another interest rate rise.
Melbourne once again led the country with a 62.1% clearance rate from 629 auctions, up from 60.0% the week before, while Sydney dropped from 56.5% to 52.7%.
| Capital city | Auctions this week | Clearance this week | Auctions last week | Clearance last week | Auctions same week last year | Clearance same week last year |
| Melbourne | 629 | 62.1% | 574 | 60.0% | 1,345 | 70.5% |
| Sydney | 964 | 52.7% | 985 | 56.5% | 1,534 | 73.6% |
| Canberra | 91 | 52.2% | 102 | 49.7% | 159 | 64.2% |
| Adelaide | 162 | 37.0% | 159 | 37.4% | 155 | 80.4% |
| Brisbane | 168 | 23.9% | 225 | 20.3% | 204 | 49.6% |
The bigger story is how much things have changed in 12 months, with just over 2,000 auctions across these five capitals compared with almost 3,400 in the same week last year.
Melbourne's volumes have more than halved, although its clearance rate has held up far better than the other capitals over that period.
Adelaide has seen the sharpest turnaround, falling from 80.4% to 37.0%, while Brisbane cleared fewer than one in four homes, although most Brisbane homes sell by private treaty, so auction results tend to exaggerate the weakness there.
| Capital city | November 2025 | September 2026 | October 2026 | November 2026 (first weekend) |
| Melbourne | 70.0% | 61.6% | 59.0% | 62.1% |
| Sydney | 71.8% | 57.7% | 55.8% | 52.7% |
| Canberra | 65.5% | 49.8% | 51.6% | 52.2% |
| Adelaide | 76.3% | 48.1% | 37.3% | 37.0% |
| Brisbane | 53.6% | 30.2% | 20.4% | 23.9% |
Source: Dr Andrew Wilson, My Housing Market, monthly weekend auction clearance rates
Andrew expects already subdued activity to decline as the spring selling season winds down, and the latest rate rise will add to the pressure on buyers.
What stands out for me is that Melbourne, which has lagged the other capitals for so long, is holding up better at auction than the markets that ran hardest over recent years.
What this means for property investors
I understand why many investors are feeling cautious, with interest rates at an 18-year high and national home values having fallen 6.7% from their March peak.
But I've invested through plenty of cycles over the past 50 years, and periods when sentiment is weak have often given patient, well-prepared investors their best opportunities.
The first lesson from this week's data is to protect your staying power, so stress test your loans against at least one more rate rise and keep a healthy cash buffer in an offset account.
If you can hold your properties through the tough times, capital growth will do the heavy lifting over the long term.
The second lesson is to be realistic about rent rises, because low vacancy rates don't guarantee that tenants can afford to pay more.
The third lesson is that rental income shouldn't be the main reason you buy, even though falling values and rising rents have lifted national gross rental yield to 3.85%, the highest since August 2019.
Cash flow keeps you in the game, while capital growth is what builds real wealth, which is why I'd be wary of chasing Darwin or Hobart on the strength of one year's rental growth.
I continue to favour investment-grade houses, townhouses and family-friendly apartments in inner and middle-ring suburbs of our big capitals, especially Melbourne, and in locations with strong owner-occupier appeal and solid long-term economic drivers.
If Andrew is right about fewer investors and stagnant new supply, the well-located homes that tenants and owner-occupiers most want to live in should become even more sought after over time.
The investors who do best from here will be the ones who have a long-term plan, buy the right property, and don't let this week's headlines prompt them into short-term decisions.
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