Home Prices Set to Reach New Records in 2026
Australian property values are expected to hit new highs across all capital cities by the end of 2026, driven largely by first-home buyer demand and easing interest rates.
According to Domain’s latest forecast, the housing market is poised for another year of solid growth, with first-home buyers using the expanded First Home Guarantee Scheme creating significant momentum in the early part of the year.
Sydney is projected to see a 7 per cent increase in house prices, pushing the median to approximately $1.92 million and bringing the $2 million threshold within reach.
Melbourne’s property market is expected to regain momentum with an estimated rise of around $87,000, taking the median house price to $1.17 million. Canberra is forecast to approach previous peak levels, heading toward $1.18 million.
More moderate house price growth of 4 to 5 per cent is predicted for Brisbane, Adelaide, and Perth. In these cities, unit prices are expected to outperform houses as buyers increasingly seek more affordable options.
Domain’s research suggests the extension of the First Home Guarantee Scheme could lift prices by as much as 6.6 per cent in its first year, creating an effect similar to several interest rate cuts happening simultaneously.
This surge in first-home buyer activity is anticipated to be most pronounced early in the year before moderating as new housing supply begins to enter the market.
Investors are likely to benefit from strong conditions in the first half of 2026, supported by solid rental yields and early capital gains, though growth may slow once new stock becomes available.
The rental market will continue to face pressure, with rents forecast to increase by approximately 3 per cent across combined capitals. Brisbane, Adelaide, and Perth could see even higher increases of up to 4 per cent, reflecting the ongoing shortage of available rental properties.
For upgraders in Sydney and Melbourne, competition is expected to be more intense, while downsizers may find themselves in a favourable position with higher sale prices and more options, particularly in the unit market.
Domain’s Chief of Research and Economics, Dr Nicola Powell, noted that affordability remains a key driver in buyer behaviour.
“Australia’s housing market is set for another strong year, with demand still high and buyers continuing to chase affordability, particularly in the unit market, which is expected to outperform in several cities,” she said.
“There are encouraging signs on the horizon, with new housing supply starting to come to market as building activity picks up. While prices and rents will remain elevated, slower population growth, rising incomes and a cautious RBA should help the market move toward more balanced conditions by the end of 2026.”
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*This information is general in nature and does not take into consideration your individual circumstances. Please contact us for further information.
