Australia’s residential property market is expected to continue rising in 2026, supported by limited supply, solid demand and underlying population growth, even as affordability pressures and economic uncertainty temper growth rates. According to the latest forecasts and market commentary, prices across most capital cities are predicted to move higher, but at a more moderate pace than the rapid gains seen in 2025.
National Price Predictions
Analysts are expecting home price growth of around 6–8% nationally in 2026, following strong annual gains in 2025 and broader momentum in the housing market. This forecast assumes a relatively stable cash rate environment after several cuts in 2025 boosted borrowing capacity.
Domain’s projections suggest median values for houses and units across the combined capitals will rise further during 2026, reflecting continued buyer demand. Demand remains particularly strong in markets with population growth and structural supply constraints.
However, experts warn that housing affordability will continue to worsen because new home approvals remain well below targets needed to alleviate supply pressures potentially keeping upward price pressure in place.
Market Drivers and Risks
Key factors shaping the 2026 outlook include:
- Low housing supply: Total listings across capital cities fell sharply late in 2025, underscoring tight market conditions that support pricing resilience
- Population growth: Continued net migration and growth rates in many states are underpinning demand, particularly in regional and smaller capital markets.
- Interest rate uncertainty: While inflation has eased somewhat, ongoing expectations of future rate moves including the possibility of increases could dampen borrowing power and slow price growth.
- Government policy: First-home buyer support schemes and shared equity initiatives increase participation but can intensify competition in an already supply-constrained environment.
Home price growth is expected to remain uneven with some capitals, outer suburbs and regional centres outperforming major metros like Sydney and Melbourne, where affordability constraints bite hardest.
Regional and Capital City Highlights
- Canberra is forecast to see steady price increases, reaching fresh record medians in 2026 as buyer demand persists.
- Brisbane, Adelaide and Perth are among the smaller capitals expected to record stronger relative growth compared with Sydney and Melbourne.
- Some analysts also identify outer suburban and regional markets as likely outperformers in 2026, as affordability constraints push buyers beyond traditional urban cores.
Despite national price growth expectations, consumer sentiment remains cautious in early 2026, with declining confidence tied to lingering concerns over interest rates, household finances and cost-of-living pressures all factors that could influence housing demand.
Western Australia Property Market: Outlook for 2026
Western Australia, and Perth in particular, has been a standout performer in recent years, and its position looks relatively strong heading into 2026.
Recent Trends and Growth
Perth’s property values have surged through 2024 and 2025, supported by high demand, low supply and strong rental conditions. Price growth in Perth has often outpaced many other capitals, with quarterly and annual increases highlighting ongoing buyer interest.
Property sentiment remains positive among investors and homebuyers in WA, with many attracted to the state’s relative affordability, rental yields and demographic growth. Surveys show a rising proportion of buyers view Perth as a preferred market for investment.
Forecast 2026 Performance
Despite strong recent gains, forecasts suggest that price growth in Perth may moderate in 2026 to a more sustainable range of about 5–8%, as rising prices and affordability limits temper the surge seen in earlier years.
Key drivers for WA’s continued performance include:
- Population growth: WA continues to record one of the highest annual growth rates in Australia, sustaining housing demand.
- Rental market strength: Perth’s rental vacancy rates remain tight, supporting rental yields and investor interest.
- Suburban growth pockets: Outer suburbs and areas near infrastructure projects are expected to see above-average growth, particularly where transport and amenity improvements are planned.
Risks and Considerations
While WA’s housing market outlook remains broadly positive, some analysts advise caution in specific suburbs showing potential pricing stagnation or overvaluation. Investment decisions in these areas may warrant careful scrutiny.
Overall, Perth’s continued performance reflects a broader trend of smaller capital cities driving national property growth as affordability pressures shift demand away from Sydney and Melbourne.
Rentals and Affordability Pressures in 2026
Across Australia, rental markets are expected to remain tight, with rents rising further in many regions due to low vacancy rates and sustained tenant demand. Property industry commentary highlights vacancies near historic lows in several capitals and regional hubs, contributing to rental growth.
However, worsening housing affordability remains a central theme for 2026, with building approvals continuing to fall short of levels needed to meet future demand a structural issue that could keep upward pressure on both house prices and rents.
Conclusion: Balanced Growth but Continued Challenges Ahead
The 2026 Australian property market outlook points to continued price growth across most capital cities, underpinned by limited supply, structural demand and demographic trends. Despite some risks including possible interest rate pressures and ongoing affordability challenges property values are expected to move higher nationally, with smaller capitals and regional markets often outperforming larger metros.
Western Australia stands out as a resilient market, with Perth and surrounding areas forecast to sustain price increases in 2026, albeit at a slightly slower pace than recent years. The combination of population growth, tight rental markets and infrastructure-linked suburb pockets supports a generally positive outlook even as buyer sentiment remains cautious and supply constraints persist.
For buyers, sellers and investors, the key themes for 2026 will be location-specific dynamics, affordability realities, and ongoing monitoring of economic indicators that influence demand, borrowing conditions and market confidence.
Sources:
- AFR
- com.au
- Bamboo routes
- Perth Now
- REIWA
- Image Source: AAP / Darren England
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