Home prices across Australia are expected to rise strongly in 2026, with experts predicting growth across major metropolitan and large regional markets. A persistent shortage of housing supply, increased borrowing capacity following recent rate cuts, and the continued strength of migration have positioned many areas of the country for significant price gains. Only the possibility of future rate hikes is seen as a potential factor that could slow the pace of growth.
The December edition of PropTrack’s Home Price Index reported annual growth of 8.7 per cent for all dwellings in 2025. According to REA Group senior economist Eleanor Creagh, many of the market forces that contributed to this outcome remain in place and are unlikely to shift materially over the next year. Interest rate reductions throughout the year, steady population increases, investor participation and the expansion of the Home Guarantee Scheme are all expected to continue supporting demand, alongside growing activity from upgraders.
Despite a seasonal uplift in listings during the spring-selling period, stock levels remain tight, and the delivery of new housing continues to be constrained. Market conditions are still tilted in favour of sellers and are likely to stay that way. Further price increases are expected heading into summer, although the extended rate pause and APRA’s cap on high debt-to-income lending are anticipated to moderate momentum into the first half of 2026, which may cause a slight easing in the pace of growth.
One of the major drivers of upward price pressure is the ongoing weakness in construction activity. The latest figures from the Australian Bureau of Statistics show that home approvals fell 6.4 per cent in October. After nearly 18 months of the federal government’s Housing Accord — which targets the construction of 1.2 million new homes by mid-2029 — progress remains more than 20 per cent behind schedule. Building approvals, which represent the most optimistic pipeline of future construction, continue to track below target, reinforcing price support.
More Boom Than Bust
SQM Research’s annual Boom and Bust report forecasts national home values to rise between 6 and 10 per cent under its base-case scenario for 2026. This outlook assumes one or two rate cuts in the second half of the year, a steady but subdued economy, and inflation between 2.5 and 2.7 per cent. SQM Research managing director Louis Christopher described 2025 as a year of resilience for the property market, supported by population growth and early stages of monetary policy easing.
He noted that 2026 could unfold across a range of possible economic paths, from slower activity and delayed rate relief to a stronger rebound. Perth, Brisbane and Adelaide are expected to achieve double-digit growth under all forecast cases, reflecting their supply constraints and economic momentum. Perth and Darwin are projected to lead national gains, with potential growth of 12 to 16 per cent, while Brisbane and Adelaide could rise 10 to 15 per cent if further rate cuts occur. Melbourne and Hobart are forecast to grow between 4 and 7 per cent, with Sydney and Canberra expected to rise between 3 and 6 per cent.
Top Suburb Picks
McGrath Estate Agents founder John McGrath identified a selection of suburbs he believes have strong potential for growth in 2026.
NSW
Ashbury is described as an Inner West pocket that continues to edge upward, supported by generous land blocks, period homes and an evolving café scene. Tennyson Point is highlighted as a quiet waterfront area neighbouring Hunters Hill, offering a charming coastal lifestyle. Other NSW locations include Newport Beach, Norah Head and Sans Souci.
VIC
Northcote is characterised as a lively urban suburb with strong hospitality offerings and excellent transport connections. Essendon West is positioned as a family-friendly location close to the CBD, featuring abundant parkland, quality schools and spacious homes. Additional Victorian picks include West Melbourne, Box Hill and Carrisbrook.
QLD
Coorparoo is recognised for its village-style atmosphere, strong transport links and proximity to Brisbane CBD, attracting both families and professionals. Redcliffe is noted for its coastal appeal, infrastructure improvements and accessibility to Brisbane. Other Queensland selections include Clear Island Waters, Peregian Beach and Mackay.
TAS
Battery Point, despite its prestige and waterfront lifestyle, is currently trading below previous price peaks, presenting potential opportunities. Midway Point is benefiting from major road and transport upgrades, increasing its connectivity. Other Tasmanian suburbs highlighted include West Launceston, Miandetta and Acton.
