The Australian property market continues to evolve in 2026, shaped by competing forces of demand, affordability constraints, supply shortages and interest-rate uncertainty. After several volatile years, many buyers, investors and homeowners are asking the same question: where is the market heading next?
To help answer that, three of Australia’s most respected property research groups — Domain, SQM Research and Ray White Group — have released their latest forecasts for 2026. While each organisation uses different data sets and modelling approaches, their conclusions share a common theme: property prices and rents are expected to keep rising this year, although the pace and scale of growth will vary significantly by city and property type.
Forecasts are not guarantees, and the property market is never immune to sudden changes. However, when multiple independent analysts point in the same direction, their insights provide valuable context for anyone considering buying, selling or investing in 2026.
This article breaks down what the experts are forecasting, the key drivers behind their outlooks, and what these trends could mean for buyers navigating the market this year.
Domain’s Outlook: Record Median Prices Across Every Capital City
Domain’s forecast for 2026 is one of the most optimistic, particularly when it comes to house prices in capital cities.
According to Domain, every capital city is expected to reach a new record median house price by the end of 2026. Across the combined capitals, house prices are forecast to rise by approximately 6%, with unit prices expected to increase by around 5%.
Among the major markets:
Sydney is forecast to see house price growth of around 7%
Melbourne is expected to record growth of approximately 6%
While these growth rates may appear moderate compared to earlier boom periods, they are significant given the already high price base in these cities. Domain attributes this resilience to sustained demand, population growth, and ongoing supply constraints.
Units Expected to Outperform in Several Cities
One of the more notable elements of Domain’s forecast is its view on unit markets. In cities such as Brisbane and Perth, units are expected to outperform houses as buyers increasingly prioritise affordability.
Domain’s Chief of Research and Economics, Nicola Powell, has highlighted that buyers — particularly first-home buyers and downsizers — are adjusting their expectations. With detached houses becoming less attainable in many suburbs, apartments and townhouses are playing a larger role as realistic entry points into the market.
Supply Slowly Improving, but Still Insufficient
Domain also notes that housing supply is beginning to improve, with more developments coming online. However, this increase is unlikely to be enough to fully offset demand, particularly in capital cities experiencing strong population growth. As a result, any easing in conditions is expected to be gradual and more noticeable toward the latter part of 2026.
SQM Research: Strong Growth Forecast in Selected Capitals
SQM Research presents a more varied outlook, with sharper contrasts between cities.
Under its base-case scenario for 2026, SQM forecasts particularly strong house price growth in:
Perth and Darwin: 12–16%
Brisbane and Adelaide: 10–15%
These markets continue to benefit from a combination of relative affordability, strong local economies, population inflows and extremely tight housing supply. Compared to Sydney and Melbourne, these cities still offer lower entry prices, which has attracted both owner-occupiers and investors.
By contrast, Sydney and Canberra are forecast to experience more moderate price growth. While SQM does not expect price declines, higher starting values and affordability pressures are likely to limit the pace of gains.
This divergence highlights an important theme in 2026: Australia is not experiencing a single national market, but rather a collection of localised markets moving at different speeds.
Rental Markets: Pressure Expected to Continue Nationwide
On rental conditions, the outlook from Domain, SQM Research and Ray White Group is remarkably consistent. Rents are expected to rise in every capital city during 2026.
SQM Research forecasts the strongest rental growth in:
Hobart
Darwin
Perth
These cities are experiencing persistently low vacancy rates, driven by population growth, limited new rental supply and changing household dynamics. While some larger capitals may see rental growth slow compared to the sharp increases of previous years, the overall consensus is that rental markets will remain tight.
For investors, this environment continues to support rental yields, particularly in affordable and middle-ring suburbs. For renters, however, affordability pressures are likely to remain a challenge throughout 2026.
Interest Rates: The Biggest Wildcard Shaping 2026
Despite broadly positive forecasts, interest rates remain the single most important uncertainty influencing how the property market performs this year.
Ray White Group Chief Economist Nerida Conisbee has noted that the market entered 2026 with “far more momentum than most expected,” but also with an unusually high degree of uncertainty.
According to Ray White:
A delayed interest-rate cut is likely to result in steadier, more sustainable price growth
An earlier-than-expected rate cut could see buyer demand surge, potentially re-accelerating prices, especially in more affordable segments where supply is limited
Even small movements in interest rates can have an outsized impact on borrowing capacity. For many buyers, a shift of even 0.25% can significantly alter how much they can afford, which in turn affects competition and pricing.
Affordable and Entry-Level Properties Likely to Outperform
A consistent theme across all forecasts is the expected outperformance of affordable and entry-level properties.
New housing supply remains constrained by high construction costs, labour shortages and planning delays. As a result, established homes in well-located, affordable suburbs are attracting strong competition.
Units and townhouses are also expected to remain in high demand. In many markets, apartments are no longer viewed as a fallback option, but rather as a strategic choice — offering a balance between location, lifestyle and price.
What This Means for Buyers in 2026
While no forecast can predict the future with certainty, the combined outlook from Domain, SQM Research and Ray White Group suggests that the balance of risk in 2026 leans toward higher prices and rents, not lower ones.
For buyers, this raises an important strategic consideration: timing.
Buyers who are well-prepared and able to act earlier in the cycle may benefit from:
Less intense competition
Lower purchase prices compared to later in the year
The opportunity to capture future capital growth rather than chase it
This does not mean rushing into a purchase. It means taking proactive steps — understanding borrowing capacity, securing pre-approval, and being clear on property criteria — so opportunities can be acted on confidently when they arise.
Final Thoughts
The property market in 2026 remains complex, influenced by economic conditions, interest-rate decisions and structural supply shortages. While the pace of growth will vary across cities and property types, Australia’s leading research groups broadly agree on one thing: prices and rents are more likely to rise than fall this year.
For buyers, preparation and timing will be critical. In a market where affordability remains stretched and competition can re-emerge quickly, being organised may provide a meaningful advantage.
If you’re considering buying in 2026, seeking advice early and understanding your options could make all the difference.
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