The surprising downside of Australia’s property boom: when housing winners feel like losers – realestate.com.au

In states where home prices are skyrocketing, money is failing to buy happiness, with homeowners significantly more pessimistic compared to the rest of the country.

Queensland, Western Australia (WA) and South Australia (SA) recorded the biggest drops in sentiment in January, the Westpac-Melbourne Institute’s Index of House Price Expectations shows.

The index measures how homeowners feel about their household finances compared to twelve months ago, as well as the short- and medium-term economic prospects and the timing of spending decisions.

All sub-indexes recorded in January were below 100 for only the second time since October 2024. The pessimists also exceeded the optimists on every component.

The results for WA, Queensland and SA come despite the three states being the outliers for rising house price growth over the past year.

Home values ​​rose 17.2%, 13% and 11.7% respectively in the states in the 12 months to December 2025.

The latest PropTrack Home Price Index confirms that Perth was the best performing capital city last year, with a house value increase of 17.2%, Brisbane also at 14.6% and Adelaide at 12.8%.

Despite this, the consumer confidence index confirms that residents of the three states are “significantly more pessimistic” when it comes to how they feel about finances, especially in the near future.

Homebuyer sentiment has improved marginally across the board this month, but remains generally gloomy.

“Consumer house price expectations continued to cool slightly in January,” said Matthew Hassan, head of Australian macro forecasting at Westpac.

“More than three-quarters of consumers expect prices to rise over the next twelve months.”

The house price expectations sub-index fell 1.4% to 167.5 in January, down almost 3% from a peak of 172.4 in November; however, the index is up 25% from a year ago.

Since then, homeowners have felt the relief of three rate cuts by the Reserve Bank, which has taken rates down to a four-year low of 3.60%.

The ‘time to buy a home’ subindex is also 89.6, up 4% from a month ago, and 17.6 points higher than in January 2024, when the cash rate was 4.35%.

Still, interest rate uncertainty, unpredictable inflation and a range of geopolitical pressures around the world have made for an uneasy start to 2026.

Perth, WA. Image: supplied

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Queensland and WA recorded a sentiment index level of 80 in January, while SA was 78. This is compared to a score of 97 in Australia’s most expensive state, New South Wales. Homeowners in Victoria also recorded a more positive 95.

“State measures show Queenslanders remain the most optimistic (176),” Hassan said. “The biggest cooldown in expectations this month has been in Western Australia (164), while consumers in South Australia are now the least optimistic about the outlook for house prices (155).

“Australian consumers have entered the new year in a somber mood.”