Australia Braces for Shock House Price Boom in 2026

Record Prices Forecast as Rates Fall and Buyer Support Expands

Australia’s property market is on track to hit new record highs in 2026, according to the latest Domain Forecast Report. The combination of three projected cash-rate cuts and the expanded First Home Guarantee scheme is expected to lift both house and unit prices across all capital cities.

However, the report notes that modest real income growth will help offset some financial pressure for buyers, while affordability concerns are set to cool growth momentum in the latter half of next year.

“It’s really going to be a tale of two halves in 2026,” says the report’s author, Dr Joel Bowman, senior economist at Domain. “We’ll see very strong price growth early next year, but that narrative will shift to steadier conditions later on. The double-digit growth we’ve seen—especially for houses in Sydney and Brisbane—is unsustainable.”

House and Unit Prices to Break Records Nationwide

By the end of 2026, Sydney’s median house price is projected to reach $1,924,430, with every Australian capital surpassing the $1 million threshold. Forecasts include:

Melbourne: $1,170,168

Brisbane: $1,185,983

Canberra: $1,178,409

Adelaide: $1,107,646

Perth: $1,046,680

With standalone houses becoming increasingly out of reach, unit prices are expected to outpace house price growth in Brisbane, Adelaide, and Perth as buyers turn to more affordable alternatives.

Brisbane stands out in particular, with unit prices predicted to climb 13% to $789,764 by late 2026—driven by limited supply and ongoing major infrastructure projects related to the 2032 Olympics.

Economists Agree: Brisbane a National Standout

PRD chief economist Dr Diaswati Mardiasmo supports the projections, noting that Brisbane is currently Australia’s fastest-growing capital city, outpacing both Sydney and Melbourne.

“There’s simply not enough stock and not a lot of new development,” she says. “That undersupply is accelerating Brisbane’s market.”

Mardiasmo also anticipates Sydney’s median house price will approach $2 million next year. She adds that stable cash rates—despite stubborn inflation and rising holiday spending—will give more buyers the confidence to enter the market.

Low Listings and Government Grants Add Fuel to Rising Prices

Real estate agents across the country continue to report strong demand, especially from first-home buyers taking advantage of the First Home Guarantee. But the ongoing listing shortage is putting additional pressure on prices.

Raine & Horne executive chairman Angus Raine notes that listings remain 18.3% below the seasonal average, escalating competition among buyers.

“The grants are pouring fuel on a fire that’s already burning,” he says. “With limited stock, many empty-nesters are reluctant to sell because they can’t find anywhere to move. The government should consider incentives that encourage more people to list their homes.”

Unit Prices Set to Rise Across All Capitals

Unit markets nationwide are forecast to reach record medians by the end of 2026:

Sydney: +7% to $891,972

Melbourne: +6% to $626,869

Canberra: +2% to $630,888

Brisbane: +13% to $789,764

Adelaide: +11% to $681,423

Perth: +11% to $612,680

These gains highlight a surge in demand from buyers priced out of the detached housing market.

Rents to Keep Climbing Into 2026

Renters will also continue to face upward pressure. The report forecasts:

Sydney

House rents: +4%

Unit rents: +5%

Melbourne

House rents: +2%

Unit rents: +3%

Brisbane

House rents: +4%

Unit rents: +5%

Adelaide & Perth

House and unit rents: +4%

Canberra

House rents: +3%

Unit rents: +4%

With supply remaining tight and demand elevated, affordability challenges will continue to dominate Australia’s rental landscape.