2026 Sydney Property Preview with John Stanley on 2GB

Peter O'Malley joins 2GB's John Stanley to give a clear read on Australia’s property market in 2026, weighing forecasts for modest growth against pressure from rising rates, strong migration, and a tight rental market. Peter looks at investor exits, tax changes, commercial risks, prestige momentum, and how jobs and AI could tip the balance.

• four to eight percent growth forecasts versus likely rate hikes
• late 2025 softness in Sydney and early January buyer intent
• immigration-driven rental pressure and CPI flow-through
• NSW land tax bite and investor retreat to Brisbane
• commercial risks in retail, office, and tenant durability
• RBA’s quarterly inflation focus and policy timing
• prestige property decoupling and AML obligations
• unemployment trend, AI job risk, and market resilience

As always if there is a specific topic you would like for us to cover, please reach out and let us know!

Transcript

SPEAKER_00 0:00

Don't have a domain app and do it with whoever you're in the property market with. So you don't have to worry about whether you like the same properties. Or if you even like each other. Don't go there. Domain. Know what we know.

SPEAKER_01 0:15

Every Monday on the John Stanley Show, we're joined for a property wrap, and now we're back in that groove as we get settled into 2026. I'm joined by Peter O'Malley from Harris Partners Real Estate. Last time we spoke, you're in Japan, of course, but now like every well, not everybody else, but a lot of people, you're back in business.

SPEAKER_02 0:34

That's right back at the desk and ready for a big year ahead in property, that's for sure.

SPEAKER_01 0:38

Well, interestingly, there's been quite a few articles about that, and the forecast range uh for modest growth in houses and apartments.

SPEAKER_02 0:47

That's right, Bill. I've been slightly surprised at how positive the uh forecasters have been uh this year. Most are expecting growth between sort of four and eight percent. And the reason that's surprising is that it's also fairly much a given that the RBA will probably be forced to increase interest rates at some stage in the first half of the year. Uh so that's a very, very bullish uh assessment by our forecasters there, that's for sure.

SPEAKER_01 1:15

And there was a little bit of a drop-off in in the final month of uh 2025, too, in Sydney anyway.

SPEAKER_02 1:22

There was. Cotality reported that uh uh apartments in Sydney actually rose 0.3% in December, but housing dropped by the same amount by 0.3, giving an overall reading for dwellings of minus 0.1%. But yes, I think most real estate agents on the ground, uh Bill, would say would confirm that the market backed off late last year, and uh and that's now popped up in Cotality's numbers for 2026.

SPEAKER_01 1:49

And there are a lot of variables. I'm talking now about the economy, which of course will affect uh confidence in the real estate market. Overall, what's twenty twenty-six looking like?

SPEAKER_02 2:00

Uh look, I think the big one is immigration. What does the government do on immigration? They've been saying for years we're hearing the message, we're heeding the message, we're going to back off. And then we get the numbers through for the respective year, and they show that another 350,000, 400,000, 450,000 net overseas migrants entered the country. The majority of those net overseas migrants end up in Sydney and Melbourne, and that is why you've got out-of-control rental markets, because there simply is not enough housing in each city to house the number of people the government are channeling down the funnel. Now, I've got a view that if the government do have any um do allow those sorts of numbers to enter the country again in 2026, the rental market will explode and will probably jump by about 10% in 2026 will have a profound impact on tenants. And when it comes to the CPI basket bill, rents are included in the CPI basket that go to form the inflation rate, whereas mortgages are not. So I think you'll see upward pressure on inflation through the rental market if the government do allow too many people to enter the country without sufficient housing.

SPEAKER_01 3:15

Well, the problem here too is that landlords will pass any rising costs that they have onto tenants if they don't get out of the market altogether. So that's another pressure too that needs to be considered.

Landlords, Taxes, And Investor Flight

SPEAKER_02 3:27

It really is. The New South Wales State Government have introduced a stealth increase land on land tax, and that is going to bite uh landlords in 2026 in New South Wales. And uh that's a that's that's a stealth increase to the land tax rate that a lot of landlords are not seeing coming, but they'll certainly know about it when their notices arrive in February. But as you say, there's been a steady bleed of landlords, existing landlords, exiting the market, and everyone wants to beat up on investors, but we haven't been selling properties to investors en masse for probably ten years, Bill, because the yields are not there to entice investors into the market.

SPEAKER_01 4:07

And are they dropping out of property altogether?

SPEAKER_02 4:11

They are, or they they they have chased property interstate. So during COVID, I remember looking at the Brisbane housing market, and the median house price in Brisbane in 2021 was five hundred and fifty-five thousand. Tonight, the median house price in Brisbane, Bill, a mere four or five years later, is one million one hundred and thirty-one thousand. And a lot of that growth has been investors leaving the Sydney and Melbourne markets and and reinvesting in Brisbane, which was showing tremendous value, being at a median price of$5.55 and obviously uh becoming the Olympic uh city in the same in the same breath.

SPEAKER_01 4:50

And uh, I guess for some of those mum and dad investors who might own one property in their lifetime, uh commercial is also very tricky because uh I think retail, it's fair to say, is still under threat from digital shopping, is it not? And warehouses, well, that's another uh argument altogether.

SPEAKER_02 5:08

Commercial real estate is really for the sophisticated investor at the moment. That's right. It's very easy to end up with an empty retail shop, and I see it all the time where a landlord will put a uh, you know, basically a zombie business at an inflated rent into their pro into their commercial property. Um the purchaser, naive purchaser will come along and pay for what seems like a terrific yield on the commercial property, and then lo and behold, at the first opportunity the tenant the tenant folds and the business is gone and the landlord can't find a uh a new tenant anywhere near the price that they uh originally um purchased the property at. So the rents drop and therefore the value of the property drops at the same time. So one really needs to know what they're doing if they're going into the commercial property sector. The other sector that's under tremendous uh pressure when you're talking commercial is offices. Work from home has decimated office values. So um yeah, you really you really need to know what you're doing if you're heading into that space as an investor.

SPEAKER_01 6:11

Now you touched on interest rates, mate, but yeah, what are you hearing? What what's been the pattern if you could say there's a pattern?

SPEAKER_02 6:18

Uh look, the RBA have shown a propensity to only react to quarterly inflation numbers, not monthly inflation numbers. Uh the next quarterly inflation number is due on Wednesday, January twenty-eight, and that will determine what the RBA do next. Um it looks to be running in the high threes, the inflation rate, and if that uh persists in the January reading, I think uh the RBA have little choice but to uh to look towards a rate hike from there.

Prestige Market And Money Flows

SPEAKER_01 6:49

Yeah, that's gonna certainly shake things up. Now you and I had an interesting and fun conversation about uh some of the luxury prestige properties that were available for rent during the holiday period, particularly in Sydney, and the numbers were just astronomical. But prestige property generally, we're not now talking about renting, but uh the you know, just the the the re the sale market.

SPEAKER_02 7:11

Yeah, look, it's been it's been a stellar performer in Sydney since uh uh since the boom of 2021. Other segments of the market cooled down as interest rates went up through 2022 and 2023. Um but not so the the prestige property market. Uh a lot of those transactions, if you can believe it, Bill, are done in cash, and the interest rate setting of the day uh doesn't impact on uh on the buyers or the sellers.

SPEAKER_01 7:38

Yeah, well, you can only speculate on where the cash comes from, can't you? But really, uh regardless of what's in our imaginations, surely the government could have a look at this. If nothing else, it might preserve some property for local buyers, but it might also rake in a bit of extra tax dollars for us because um I don't know, it it it seems rather strange, doesn't it? That a lot of them would be from offshore.

Jobs, AI, And Market Resilience

SPEAKER_02 8:02

Oh, very much so. There's an absolute disconnect to how the economy is performing, how the mainstream Australia is uh you know pushing through in these tough times, if you like, this cost of living crisis, and then the price prestige end of the market is uh is spending money like it's going out of fashion. Now, is it crypto money, is it share market gains, is it accumulated wealth, inherited wealth, offshore funds, money laundering, um take your pick, it's probably a mixture of all of those. What I can tell you in 2026 is real estate agents nationally have uh extra obligations on them to report suspicious activity in the property market. Uh so the government know that real estate has been used to to funnel a lot of uh dirty money. Uh developers doing big projects that you know break even but they clean the cash in the process. Uh these are the sorts of things that the government are zeroing in on because um real estate uh frighteningly is an easy way to wash cash.

SPEAKER_01 9:02

We're talking to Peter O'Malley from Harris Partners Real Estate about uh it's the weekly property wrap, but it's our first for 2026. So we're having a big picture assessment. Uh finally, mate, employment. Uh that again is going to be a very influential statistic on the property market in 2026.

SPEAKER_02 9:19

Uh look, it really is. Bill, in Australia, we've uh had a golden run economically as we know, and Australians think that good employment conditions are a norm and a right of passage. And that's not quite the case. Uh we've just we have had a a golden run, but I can tell you from a lot of people that I've spoken to that AI does represent an a a threat to employment and jobs in 2026, and uh a lot of corporates are struggling to lift their top line revenues. So the easiest way and most likely way that they can increase their profits is by cutting costs, and uh jobs that can be turned over to AI or outsourced overseas for a lower amount are at real risk in 2026. Now, I'm hoping this is not the case. I think that's a sad way for a society to go, um, but the great employment conditions that we are used to in Australia, we must just keep an eye on the unemployment rate. It bottomed, I think, at 3.4% in August or September 2022, uh, and it's been gradually edging up to a peak of 4.5% late last year. Now, after it hit 4.5%, the unemployment rate, as we know, dropped back to 4.3%. But the overwhelmingly long-term trend is unemployment is going up, and uh we wouldn't want to see it accelerate through five percent. I think you'd see that impacting on the property market. If unemployment can stay below five percent, that should not play play a role in the way the property market performs this year.

SPEAKER_01 10:55

All interesting stuff to think about. We'll see how those trends unfold over the year, and of course we'll talk about what's happening next week. Will we have any opens by uh next week, Peter, or are we still waiting for it?

Early Buyer Activity And Wrap

SPEAKER_02 11:06

Yeah, indeed. No, no, Bill. Uh if you can believe it, we were showing properties on Saturday, and we've had many open inspections where eight to ten parties arrived and and and qualified as well. What I'll say about any buyer that's looking or attending an open house in early January, they're not a tie kicker, they're out to do business, which is why they're there.

SPEAKER_01 11:25

Hitting the ground running. Well, we'll talk about that in more detail next week. Peter and Melly, thank you. My pleasure. Thank you, Bill.

SPEAKER_00 11:30

Mr. Maine, you can have property price estimates trusted by the banks so you don't have to worry about whether the house is cost your funds or not. Except when it comes to your design, you're gonna do that.