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The property market may be experiencing a levelling out, but this stabilization could be laying the groundwork for a gentler market climate as we approach 2026, according to industry experts.
Despite current predictions, Tim Lawless, a property analyst, emphasizes that the year’s market outlook is still uncertain and largely hinges on the behavior of interest rates, which could significantly influence future trends.
In cities like Brisbane, Adelaide, and Perth, unit prices are anticipated to climb more swiftly than house prices. This shift is driven by buyers increasingly seeking more affordable housing options, a trend that reflects broader economic pressures.
According to Domain’s latest projections, by 2026, the median house price across the combined capital cities is expected to see an increase of 6%. This forecast underscores a cautious optimism in the housing market’s trajectory over the coming years.
Domain’s most recent forecasts predict the median combined capital city house price is on track to rise by 6 per cent in 2026.
House and unit prices across the country’s combined capitals are predicted to rise by 6 per cent and 5 per cent respectively, reaching a record high by the end of 2026, according to Domain.
“Even though we did see a stronger growth outcome across regional Australia in 2025 … it does seem that the strongest regional markets are very much skewed towards the very affordable areas that typically are very different to what we’re seeing as the strongest regional markets through the pandemic,” he said.
What will the rental market look like this year?
Following years of rises, Perth’s rental market is showing signs of moderation this year.
Rent prices for units are expected to increase more than houses this year.
In most capital cities, unit rent prices are expected to rise slightly faster than house rents, reflecting affordability pressures and stronger demand for smaller, more affordable dwellings.
But Lawless said with vacancy rates nationally at 1.7 per cent, there won’t be much of a rise.
How will policies impact the market?
“Even when we simply split out properties that are above or below the expanded deposit guarantee price caps, it’s really clear there’s been a divergence in growth trends even a month prior to the scheme going live,” Lawless said.
For some jurisdictions, the introduction of policies — such as Victoria’s ban on rental bidding — that protect renters may impact investors seeking to buy.
What are banks predicting?
“Well, clearly, a higher interest rate environment is a net negative for housing markets and housing demand. It probably also sends a bit of a shudder through sentiment, which is really important for housing markets or any sort of purchasing decision that’s on a high financial commitment,” Lawless said.
