Australia’s housing market is set to reach new highs in 2026, with property prices expected to continue their record-breaking trajectory despite growing uncertainty over further interest rate cuts from the Reserve Bank of Australia.
The combined median capital city house price is forecast to surpass $1 million for the first time, according to data released by PropTrack. As of November, the median capital city home price stood at $979,000.
The latest realestate.com.au Property Market Outlook predicts annual home price growth of between 6% and 8% nationally. The forecasts, authored by realestate.com.au economists Angus Moore, Eleanor Creagh and Anne Flaherty, suggest some capital cities could record double-digit growth.
Nationally, the median home price has risen 8.7% over the past year to a record $873,000, up 51% compared with five years ago. Prices have now risen for 11 consecutive months, supported by a series of interest rate cuts over 2025 that lifted buyer confidence and activity.
“The reasons that we’re expecting to see home prices continue to grow and reach new record highs is the fact that we’ve already seen a few rate cuts this year, and that’s still flowing through into home prices,” Moore said.
Brisbane and Perth are expected to be the strongest-performing capital cities in 2026, with price growth forecast at between 7% and 10%. Both cities have benefited from tight supply conditions and strong population inflows.
“What we’re seeing in these markets is that the rate at which new homes are being built is not keeping up with the rate at which the population is rising,” Flaherty said. “These were also the fastest performing markets in 2025 and that momentum is likely to continue into next year.”
Adelaide, which recorded price growth of 12.2% over the past year, could see that pace almost halve as affordability constraints emerge, although prices are still expected to rise by between 6% and 9%.
Sydney and Melbourne are forecast to post more modest growth of 5% to 7%, broadly in line with gains recorded over the past year. Hobart has a wider growth range projected at 4% to 7%.
A severe shortage of housing supply in Perth, Brisbane, and Adelaide remains a key factor underpinning stronger performance, with active listings in these markets down about 45% from pre-pandemic levels.
PropTrack data shows the top 10 best-performing regions over the past 12 months were all located in Queensland and Western Australia.
“The tight supply backdrop that has supported price growth this year remains, yet stretched affordability and an extended pause on interest rates are set to temper the pace of growth,” REA Group senior economist Angus Moore said.
The forecasts assume interest rates remain on hold throughout 2026. However, Moore noted that stronger-than-expected inflation could prompt rates to rise sooner, placing downward pressure on home prices.
