The Australian housing market is heading into 2026 with far more momentum than expected, although the pace of price growth is likely to slow by mid-year as the timing of rate cuts and constrained new supply shape the next phase of the cycle, according to Ray White Group chief economist Nerida Conisbee (pictured).
Fresh national forecasts from SQM Research align with this outlook, predicting dwelling price rises of 6% to 10% in 2026, supported by strong demand and momentum from 2025’s monetary easing.
Conisbee said the recent surge in values has come earlier than expected, driven by tight supply, renewed confidence in the capitals, and continued strength across regional and lifestyle markets.
She noted the recovery has broadened significantly: Melbourne and Darwin, which were slow to join the upswing, are now “firmly back in growth territory,” with Melbourne surpassing its previous peak and Darwin rebounding on the back of low listings and heightened investor demand.
“These late-cycle improvements highlight a national market that is increasingly synchronised, even if individual city drivers differ,” Conisbee said.
Prestige markets have re-entered the growth cycle, led by Sydney’s high-end suburbs, where earlier rate cuts have encouraged more activity among upper-tier buyers.
Perth continues its remarkable run, with suburbs such as Cottesloe–Claremont delivering some of the highest dollar-value gains nationally. Brisbane remains a consistent performer across its inner-city markets.
Lifestyle regions are still in high demand. Conisbee pointed to the Gold Coast, where unit prices “now sit above Sydney’s” following strong migration and investor activity.
The expansion of the 5% deposit scheme is channelling more demand toward entry-level homes.
“The removal of income caps and the lift in price thresholds have dramatically broadened eligibility and lowered upfront costs for first-home buyers,” Conisbee said.
Affordable homes are “consistently outpacing the wider market across most cities,” with regional Queensland recording annual growth as high as 13.8%.
New affordability data underscores the pressure at this end of the market. PropTrack’s latest report shows affordability improved only slightly in 2025 and remains near record lows, while Cotality estimates mortgage serviceability close to 45% of income and rent-to-income ratios above 33%.
Conisbee said interest-rate timing will strongly influence whether growth holds or cools.
“The biggest wildcard remains the timing of rate cuts,” she said, pointing to strong labour-market conditions delaying expectations despite soft signs in retail spending, small-business credit and consumer sentiment.
Within construction, shrinking pipelines and easing wage pressures suggest a major inflation driver “is unwinding,” helping to keep the path to lower rates open.
However, Conisbee said cuts are “unlikely in the first half of the year.”
Westpac and NAB echo this view, with real-time indicators pointing to firmer activity and inflation still too sticky for rate cuts. Both now expect the cash rate to stay at 3.6% for an extended period.
Conisbee expects the market to transition out of double-digit growth by mid-year.
“If it does, the combination of lower borrowing costs, improving construction conditions, and persistent supply shortages could easily re-accelerate prices,” she said. “Without one, the market will continue to grow, just at a steadier and more sustainable pace.”
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