The surprising downside of Australia’s property boom: Where real estate winners feel like losers

Money is failing to buy happiness in states where home prices are rising, as homeowners are more pessimistic compared to the rest of the country.

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

The index measures how householders feel about their household finances compared to the previous 12 months, as well as the short- and medium-term economic outlook, and the timing of spending decisions.

All indices recorded in January read below 100 for only the second time since October 2024. Pessimists again outnumbered optimists in all sectors.

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

House prices increased by 17.2%, 13% and 11.7% across all provinces respectively in the 12 months to December 2025.

The latest PropTrack Home Price Index confirms Perth was the strongest performing capital city over the past year, with house prices up 17.2%, Brisbane up 14.6% and Adelaide up 12.8%.

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

Home consumer sentiment has improved slightly this month across the board, but remains downbeat overall.

“Consumer house prices continued to cool slightly in January,” Australian macro-forecasting head Matthew Hassan said.

“More than three-quarters of consumers expect prices to rise in the next 12 months.”

The sub-index of house price expectations fell 1.4% to 167.5 in January, down nearly 3% from 172.4 in November; However, the index has risen by 25% in the past one year.

Since then, landlords have been relieved by the Bank’s three rate cuts, bringing the rate down to a four-year low of 3.60%.

The minimum ‘time to buy a home’ index is 89.6 – up 4% last month, and 17.6 points ahead of January 2024 levels when the cash rate was 4.35%.

Apart from this, interest rate uncertainty, unexpected inflation, and a range of global geopolitical pressures have made 2026 off to an inauspicious start.

Perth, WA. Image: provided

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Queensland and WA recorded an index level of 80 in January, while SA was 78. This compares to 97 points in Australia’s most expensive state, New South Wales. Homeowners in Victoria also recorded an excellent 95.

“The state’s measures show that Queenslanders remain very strong (176),” Mr Hassan said. “The biggest cooling that was expected this month was in Western Australia (164) and buyers in South Australia are now the lowest house price force (155).

“Australian consumers enter the new year in a state of crisis.”