Key takeaways
The labour market remains historically strong. Unemployment is just 4.1%, and workforce participation is at a record 66.7%. That’s not the backdrop you usually see before a housing downturn.
Jobs growth is supporting housing demand. Full-time employment and total hours worked are rising. Job security underpins mortgage serviceability and buyer confidence.
Wages are rising, but not overheating. Wages are up 3.4% annually, supporting borrowing capacity. At the same time, moderate growth reduces pressure on inflation and future rate hikes.
Households are resilient, but not flush. Real wages remain constrained because inflation is still biting. This creates pressure, but not the type of stress that triggers forced selling at scale.
Auction markets show underlying confidence. National clearance rates are around 70%, higher than last year despite more listings and higher rates. That suggests buyer depth and steady demand beneath the headlines.
Is Australia’s property market really under pressure… or is it quietly building strength beneath the surface?
We keep hearing that higher interest rates should be slowing everything down. That households are stretched. That the economy is on shaky ground. But what if the data is telling a very different story?
Right now, unemployment is sitting at just 4.1 percent. That’s close to historic lows.
At the same time, workforce participation is running at a record-high 66.7 per cent.
In other words, more Australians are working than ever before. And on top of that, wages are still rising, up 3.4 per cent annually.
Those aren’t the numbers you typically see before a housing downturn.
So the big question is this: are we misreading the cycle? Have higher rates slowed momentum… or have they simply reshaped it?
And what does a strong labour market combined with rising incomes mean for property values, borrowing capacity, and buyer confidence through the rest of 2026?
That's what Dr. Andrew Wilson and I discuss in this week's Property Insider chat, as well as the latest auction clearance results which gives an in-time indication of how our housing markets are performing.
Our labour market is still strong
At a time when headlines are awash with talk of rate-induced downturns and consumer gloom, the actual economic indicators tell a story that’s more nuanced.
And, in many respects, more constructive than the mainstream commentary suggests.
Watch this week's Property Insider Chat as Dr. Andrew Wilson explains how the latest Australian Bureau of Statistics figures show that unemployment in January 2026 remained at 4.1 percent - a rate that’s stayed in that narrow band for months and is historically low by broader economic cycle standards.
Employment actually increased, particularly in full-time roles, and total hours worked ticked higher - signs that businesses are still finding demand for labour even in a higher-rate environment.
- Also read:Latest Property Price Forecasts Revealed. Australian Property Market Outlook 2026: Where To Now After The Rate Rise.
- Also read:Are We Misreading Australia’s Property Market Right Now? | Property Insiders
- Also read:This week’s Australian Property Market Update – Latest Data, State by State February 24th 2026
- Also read:National Weekly Auction Report – February 21st 2026 | Auction Markets Steady Again Despite Listings Surge and Higher Rates
- Also read:Adelaide housing market update | February 2026
What’s especially telling is not just the headline rate but the context.
A tight labour market traditionally underpins consumer confidence and housing demand because it supports stronger household balance sheets.
When people feel secure in their jobs, and when hours worked grow, that bolsters capacity to service mortgages and sustain spending - two critical drivers for the property market.
At the same time, wages are still rising, though not dramatically.
The ABS Wage Price Index rose by 0.8 percent in the December 2025 quarter and 3.4 percent over the year, consistent with recent quarters and with market expectations.
Watch this week's Property Insider chat as Dr Andrew Wilson explains that this is meaningful for a couple of reasons:
- It suggests ongoing income growth, which lifts borrowing capacity and supports buyer confidence, even if slowly. For investors and aspiring homeowners, consistent wage momentum helps buffer cost-of-living pressures.
- The fact that wage growth hasn’t surged uncontrollably takes pressure off inflation, which had been the main rationale for the Reserve Bank of Australia’s rate hikes.
Yet at the same time, real wages - wages adjusted for inflation - have been compressed because consumer prices are still rising faster than pay packets, which means households aren’t feeling dramatically richer.
The broader picture is one of economic resilience with real constraints, and it will be interesting to see the latest CPI figures, which come out later this week.
Auction markets steady again despite listings surge and higher rates
Watch this week's Property Insider video as Dr. Andrew Wilson reports how our capital city auction markets again delivered steady results despite the continuing surge in listings - particularly in Sydney and Melbourne, and the likely impact on confidence of the recent increase in official interest rates.
The national weekend auction market reported an average clearance rate of 70.7% over the past week, which was slightly higher than the 69.0% reported over the previous week and again higher than the 62.9% reported over the same week last year.
Auction listings will continue to challenge buyer depth in markets over the coming weeks, particularly in Melbourne but recent results continue to reflect solid market confidence and buyer depth despite higher interest rates.
