As we look towards what promises to be another helter-skelter year for real estate, it’s worth looking back at the previous 12 months to give us context for what might be ahead of us as buyers and sellers of property.
The “good and the great” of property forecasting have spent a fair amount of their PR budget telling us their predictions for 2026.
Domain appeared to catch the most headlines by proclaiming Sydney and Melbourne would lead the increase in values next year with prices likely to rise 6%.
The “Big Four” banks dusted off their crystal balls, too. ANZ predicted a 5.8% rise in capital city prices. CBA was a little more conservative at 4%, while NAB aligned with Domain, predicting 6%. The most bullish was Westpac, which has forecast a 9% increase across the five mainland capital cities.
Our guess is that they might tone down these claims a little given the Reserve Bank of Australia (RBA) is again fretting about inflation.
What’s the lesson here for property buyers and sellers – it’s that the market can turn on a sixpence (or a dime).
So, here comes the truth, and then the context: Property values are built on supply and demand and tempered by economic confidence and the cost of money. Currently, you can be confident that a well-presented house or apartment is going to find willing buyers. Good homes will always sell.
The context that sets us up for a strong 12 months is a story of market recovery and stimulation in 2025. Last January, the property scene was asleep. It took the first of three rate cuts to wake everyone up in February.
As the market responded, it became clear that immigration rates of 450,000+ a year, combined with slowing completion rates of new residential buildings, would drive prices higher.
Industry researcher Cotality says the 2025 market defied intense affordability and cost of living pressures “to deliver an above decade-average growth rate” of more than 8%.
Cotality says the 2025 market produced “an unexpectedly strong rebound as interest rate cuts, easing inflation and limited supply reignited competition”.
Then there was October’s new 5% Home Guarantee Scheme (HGS), designed to allow first-time buyers to enter the market without having to pay Lenders Mortgage Insurance. As a result, banks say they can’t keep up with the number of loan applications.
With November claiming a month-on-month rise of 1% in residential property values, the market is now valued at $12 trillion.
Australia has pushed through this benchmark due to the high, single-digit increases in value delivered by mid-size capitals Perth, Adelaide and Brisbane.
So what does this mean for the next 12 months?
Firstly, waiting on the sidelines is a very bad idea. Australian property is unlikely to ever be cheaper.
For upsizers, the fiscal gap between your existing home and your next purchase will only grow – so bite the bullet.
And for first-time buyers, lock in on the HGS before someone realises the massive impact and potential liabilities of the Federal Government underwriting all those loans at 15%.
More generally, the 2026 market might be a little more conservative. The RBA sounds like it’s put away the knife used for rate cuts. But Cotality, which is conservative by nature, says tight supply combined with only modest demand will still “create upward pressure on prices”.