Oil Prices, Rate Rises and Buyer Confidence: How Queensland Stacks Up Against Sydney and Melbourne

Two things are pushing on buyers this spring, and both come from outside the property market. One is oil. The conflict in the Middle East has kept Brent crude above US$100 a barrel for most of September, around US$33–36 more than this time last year. The other is interest rates. All four big banks now expect the Reserve Bank to lift the cash rate at its meeting on Tuesday 29 September, and ANZ expects a second rise in November.

Neither is a housing story on its own. Put them together, though, and they go straight to the thing that moves property markets most: whether buyers feel confident enough to commit.

So what does this mean for buyers in Queensland? And is Brisbane better or worse placed than Sydney and Melbourne? Let’s work through it.

How a barrel of oil ends up in your mortgage

It’s easy to think of oil as something you only notice at the bowser, but it reaches home buyers in three ways.

1. The weekly budget. The ACCC’s latest monitoring shows average petrol prices across the five largest cities were 53 cents a litre higher in mid-September than before the conflict began in February. Diesel was 91 cents higher. Pump prices went back above $2 a litre this month, helped along by the end of the temporary cut to fuel excise. For a household filling up 60 litres a week, 53 cents a litre adds up to about $138 a month. That money doesn’t go towards a deposit or repayments.

2. Inflation, and then interest rates. Diesel moves freight, so dearer fuel shows up in the price of groceries, building materials and almost everything else. The RBA has said directly that higher fuel prices are feeding into inflation and are likely to have “second-round effects” on goods and services more broadly. Annual inflation was 3.5% in July and trimmed mean inflation was 3.6%, both well above the 2–3% target. That’s why the cash rate has gone from 3.60% at the start of the year to 4.35%, and why more rises are now expected.

3. Confidence. Uncertainty makes people put off big decisions. The US Energy Information Administration expects some limits on Middle East oil exports to continue until at least the second quarter of 2027, so this is unlikely to be fixed within one spring selling season.

What the rate forecasts mean in dollars

The cash rate has risen three times in 2026 (February, March and May) and has been on hold at 4.35% since then. Here’s what the banks now expect:

Bank	Forecast	Cash rate by end of 2026
CommBank	+0.25% in September	4.60%
Westpac	+0.25% in September	4.60%
NAB	+0.25% in September, possible November rise	4.60–4.85%
ANZ	+0.25% in September and November	4.85%

For a $600,000 loan over 30 years (principal and interest, assuming a variable rate of 6.60% today and the full rise passed on):

Today (6.60%): about $3,832 a month
After one rise (6.85%): about $3,932 a month (+$100)
After two rises (7.10%): about $4,032 a month (+$200)

Add the extra fuel cost and a typical commuting household with a mortgage could be $240–$340 a month worse off than it was before the oil shock. For a first home buyer, the bigger issue is borrowing capacity. Each rise reduces the amount a lender will approve, often by tens of thousands of dollars.

Confidence is already falling

The Westpac–Melbourne Institute Consumer Sentiment Index fell 5.2% to 84.4 in September. That’s deep in pessimistic territory, and Westpac named fuel prices and interest rates as the two main causes. Nearly two in three consumers now expect mortgage rates to rise, and homebuyer sentiment “pulled back sharply”. Westpac’s latest Housing Pulse describes the market as “delicately poised” and now expects home sales to drop by around 25%. It warns of an “air pocket” where thin trading leads to more volatile prices.

The federal tax changes add to the uncertainty. Investors buying an established home after Budget night (12 May 2026) lose negative gearing against other income from 1 July 2027. From the same date, the 50% capital gains tax discount is being replaced with indexation and a 30% minimum tax rate. Those measures are now law. Investors have been a big part of Queensland’s buyer pool, and they’re rethinking their numbers at the same time as owner-occupiers are feeling squeezed.

Brisbane vs Sydney vs Melbourne: three different starting points

The latest Cotality Home Value Index (to 31 August) shows values falling across almost every capital city. Nationally, values fell 0.9% in August, the fifth monthly fall in a row, and 93% of capital-city suburbs recorded a drop over winter. The three cities are coming into this from very different places, though.

	Brisbane	Sydney	Melbourne
Change in August	−1.0%	−1.4%	−1.1%
Change over three months	−2.7%	−4.7%	−3.9%
Below peak	Peaked May 2026	7.1% below Feb 2026 peak	6.8% below March 2022 peak
Growth over past five years*	+71.2%	+9.5%	−1.6%
Auction clearance (latest, preliminary)	~26–28%	~51%	~52%
Same time last year	~52%	~70%	~71%

*Cotality, to July 2026. Auction figures from Cotality and Domain for September weekends. Brisbane’s auction market is small and most homes there sell by private treaty, so its clearance rate swings a lot from week to week.

Sydney: highest prices, most exposed to rates

Sydney’s median dwelling value is about $1.22 million, so rate rises hit its buyers hardest in dollar terms. It’s also falling fastest. Values are 7.1% below February’s peak, a sharper fall than at the same point in the 2022–23 correction. Expensive houses are falling fastest (−1.8% in August compared with −0.4% for units), because that’s where borrowing capacity runs out first.

Melbourne: little cushion left

Melbourne never got back to its 2022 peak, and values are lower than five years ago. Cotality’s modelling shows Melbourne has the smallest buffer of any capital. A fall of more than 10% would take values back to pre-pandemic levels. Melbourne buyers aren’t dealing with a boom turning into a bust. They’re dealing with a market that has been flat for years and is now slipping again.

Brisbane: big buffer, but confidence has shifted most

Brisbane is where the confidence story matters most. Values rose more than 71% in five years and only started falling in June. On paper, Brisbane has a lot of room: Cotality notes that even double-digit falls would barely dent the gains made in cities like Brisbane, Perth and Adelaide.

The psychology has changed quickly, though. A year ago Brisbane buyers were competing hard and worried about missing out. Now auction clearance rates are among the lowest in the country, and houses and units are falling at the same pace (−1.0% each in August). Buyers who have only ever seen Brisbane prices go up are seeing them fall for the first time in years. That change in expectations can slow a market more than the rate rises themselves.

Why oil may hit South East Queensland harder

This is where the oil price becomes a Queensland issue in particular. Much of the growth in South East Queensland has been in car-dependent areas like Moreton Bay, Logan, Ipswich and the northern Gold Coast, where households often run two cars and commute a long way. Regional Queensland relies heavily on diesel for freight, farming and mining. In those areas, a 53-cent rise in petrol and a 91-cent rise in diesel is a serious hit to the budget. When a buyer’s weekly costs go up and their borrowing capacity goes down at the same time, confidence falls fastest in the suburbs that have driven Brisbane’s growth.

What this means if you’re buying in Queensland

Falling confidence isn’t all bad news for buyers. It changes who holds the negotiating power.

Less competition. Fewer active buyers means fewer bidding wars, more time to do your due diligence, and more room to negotiate on price and conditions.
Vendors are adjusting. Homes are taking longer to sell and discounts are getting bigger across the capitals. Vendors who priced at last summer’s levels are having to adjust.
Plan for the next rate rise, not the current rate. Get pre-approval and work out what you can afford at 0.50% above today’s rate, plus realistic fuel and living costs. If the numbers only work at today’s rate, the purchase is too tight.
Think about location and running costs together. A cheaper house with a 45-minute drive each way may cost more over time than a slightly dearer home near rail, work or schools. When fuel prices are high, transport costs need to be part of the calculation.
Investors: check the new tax rules. For established homes bought after 12 May 2026, look at the numbers without negative gearing from July 2027. Rental yields are improving (Cotality’s national gross yield hit 3.79% in August, the highest since 2019), but get tax advice before you buy.
Don’t try to pick the bottom. Nobody knows exactly where oil or interest rates will go. The aim is to buy the right property at a fair price, on terms you can keep up with, rather than trying to time the market perfectly.

The bottom line

Oil prices and interest rates are pushing buyer confidence down across the country, but not in the same way everywhere. Sydney buyers are most exposed to rate rises. Melbourne has the least buffer. Brisbane has the most equity cushion, but its buyers have had the biggest shift in mindset, and its car-dependent growth areas are the most exposed to fuel costs.

For well-prepared buyers, a less confident market is often a better time to buy than a booming one. It’s worth having someone on your side who knows the local market and can tell you whether a property is good value.

Interested in knowing more about Real Estate? Contact The Learning Team by email hello@tlt.edu.au to find out how easy it is to get started in a real estate career.

This article is general information only and isn’t financial, tax or legal advice. Figures are current at the time of writing (27 September 2026) and may change, including after the RBA’s decision on 29 September. Speak with a licensed finance professional and tax adviser about your own situation.

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