Australia’s residential property market has kicked off 2026 showing steady growth, but the benefits are increasingly concentrated in high-quality homes and well-located developments. Supply shortages, rising construction costs, and ongoing affordability pressures are shaping a market where careful investment and strategic planning are more important than rapid expansion.
According to a January 2026 report from Futureland Property Group, which draws on data from CBRE, SQM Research, and Metropole, the market remains structurally undersupplied despite more than two years of elevated interest rates.
National property listings remain around 20% below long-term averages, with smaller and lifestyle-driven markets experiencing the most acute shortages. Capital city vacancy rates sit at approximately 1.2% nationally, while dwelling completions continue to lag population growth.
“This is not primarily a demand spike; it reflects ongoing supply constraints,” the report noted.
Apartment supply is forecast to average around 60,000 dwellings per year through to 2030, a figure the report describes as insufficient relative to projected population growth.
Brisbane continues as one of Australia’s strongest-performing capital city markets, with house prices reaching a median of approximately $1.06m, up 8% year-on-year, while units climbed 12% to roughly $727,000. The city’s vacancy rate sits at 0.9%.
Perth demonstrates the nation’s tightest rental market, with a vacancy rate of 0.7%. Houses have reached a median of approximately $895,000, up 7% year-on-year, while units increased 10%.
Adelaide maintains steady growth, with house prices at roughly $912,000, up 6% year-on-year, and units rising 6%. Listings remain around 40% below long-term averages, with vacancy at 0.8%.
Lifestyle markets including the Sunshine Coast and Gold Coast continue to outperform, with house prices rising 9% to 10% and 6% to 10%, respectively, year-on-year. Rents in these areas have increased 50% to 60% since 2020, though growth is now moderating.
Sydney and Melbourne are experiencing slower, more sustainable growth patterns. Both markets are described as rebounding steadily, though affordability constraints limit rapid acceleration.
Recent interest rate cuts have improved sentiment and borrowing capacity, though the report cautions against expectations of a 2021-style surge.
“The primary impact has been psychological: Confidence is returning, buyers are re-engaging, developers are reassessing stalled projects,” the report said.
However, construction costs, planning delays, and feasibility constraints remain significant factors.
The report emphasised that the widening gap between high-quality assets and average stock represents a fundamental shift in market dynamics.
“The next phase of this cycle will reward discipline, patience, and strategy — not hype,” the report highlighted.
The analysis suggests affordable, investment-grade assets in Brisbane, Adelaide, and Perth continue offering the strongest risk-adjusted returns, while medium-density and infill projects benefit from rising rents and strong absorption rates where feasibility remains sound.
