The first predictions for the 2026 Australian property market are already making headlines as buyers and sellers alike ask themselves how high can prices go.
The property portal Domain has been one of the first out of the blocks with its predictions, forecasting a 6% rise in values across all capital cities next year.
Its “Forecast Report 2026” says the average value of a home in metropolitan areas will be a record-breaking $1,339,267.
Prices for apartments will rise 5% and achieve an average value of $759,112 by the end of next year.
The predictions are not so outlandish given the current market is tracking at an annual value growth rate of 6.1%, according to the industry research Cotality (formerly CoreLogic). It has also reported that prices were 1.2% higher across Australia in October compared with the previous month of September – a huge spike for just four weeks.
The “Big Four” banks have been dusting off their crystal balls, too.
ANZ has predicted a 5.8% rise in capital city prices. CBA is a little more conservative at 4%, while NAB aligns with Domain, predicting 6%.
The most bullish is Westpac, which has forecast a 9% increase across the five mainland capital cities.
Domain said the driving force behind 2026 prices rises would be the expanded Home Guarantee Scheme, which has already supercharged the entry-level tier of the market since its relaunch in October. This has had a ripple effect further up the property ladder, too.
And while the Reserve Bank of Australia (RBA) recently decided to hold its cash rate guidance at 3.85%, the three interest rate reductions earlier this year have given buyers additional confidence.
Now, the question of affordability is becoming increasingly relevant. Cotality says new owners are spending twice as much on mortgages as compared with five years ago. Despite recent rate dips, the cost of servicing a new loan requires 45% of median household income.
Meanwhile, tenants are dedicating a record 33.4% of their income to rent, significantly exceeding the 20-year average.
Despite these factors, Domain says price increases will continue at their current levels. Sydney houses may rise 7 per cent to a median $1,924,430 while Melbourne will grow 6% to a median $1,170,168.
Domain chief of research and economics, Dr Nicola Powell, said: “Our expectations are prices are going to continue to rise next year, both for houses and for units, and our forecasts show that all capital cities are going to be at new record highs by the end of next year.”
Melbourne’s property market, which has struggled for the past three years, would be “fully recovered in house and unit prices” by the end of 2026, said Dr Powell.
The fastest growing cities in 2025 would see cooler house markets but not lower prices. Perth and Brisbane (+5%) and Adelaide (+4%) would continue their remarkable growth records.
Units would outperform detached dwellings in some cities, according to Domain. It forecast a 7% rise in apartment values for Brisbane to a median price of $789,764. Perth and Adelaide would grow 6% and 5% respectively.