Australia's property market is projected to experience moderated growth in 2026, following a period of significant expansion. While home prices are anticipated to reach new highs, the pace of growth is expected to decelerate. Factors such as potential interest rate increases, limited housing supply, and sustained demand are identified as key influences.
2026 Market Outlook
Analysts project a deceleration in Australian property price growth for 2026. Despite this moderation, some forecasts, such as those from Anne Flaherty, a senior economist at REA Group, suggest home prices will reach new highs, albeit at a slower pace than observed in previous periods.
Aaron Scott, co-founder of property technology app bRight, assessed the 2026 property market, indicating that property investment could face challenges despite recent substantial growth. Scott cited observed signs of weakness in major capital cities and slowed growth in smaller capitals as contributing factors. These observations specifically apply to investment properties and not to homes purchased for owner-occupation.
Key Market Influences
Several factors are expected to shape the property market in 2026:
- Interest Rates: The risk of interest rate increases remains, with no further rate cuts anticipated for 2026. A possibility of rate increases exists if inflation continues, which could impact borrowing costs and potentially contribute to negative growth in certain property sectors.
- Supply and Demand: Limited new housing supply and persistent demand are expected to support price growth.
- Government Initiatives: Government-backed initiatives for first-home buyers and the Australian Government's 5 percent Deposit Scheme are cited as supportive factors for market activity.
- Investor Re-engagement: A re-engagement of investors is also noted as a contributing factor.
Segment-Specific Projections
Market activity is projected to vary across different property segments:
- Affordable Market: This segment is expected to maintain activity, supported by government initiatives, a re-engagement of investors, and sustained demand for budget-friendly properties. Price growth is particularly anticipated in these more affordable segments.
- Higher-Priced Segments: These areas are projected to experience a reduction in growth.
Recent Market Performance
The anticipated moderation for 2026 follows a period of significant expansion over the past 12 months. National home prices have risen by 8.8 percent year-on-year, with the median home value currently at $880,000. Double-digit house price growth was observed across numerous regions nationwide, with strong performance noted in cities such as Perth, Adelaide, and Brisbane. This period was influenced by low housing inventory and declining interest rates, including three interest rate cuts in 2025.
In December, national home prices saw a 0.1 percent increase, as reported by PropTrack’s Home Price Index. Regional performance varied during this month:
- Adelaide recorded the strongest growth at 0.8 percent.
- Brisbane and Perth each experienced a 0.5 percent growth.
- Sydney and Melbourne experienced a 0.3 percent decline in home prices.
- Canberra saw a 0.2 percent dip in prices.