Australian House Prices Expected to Rise at Least 5% in 2026 After Jump Last Year
In 2025, every Australian state and territory capital saw house price increases, with Darwin leading at 18.9%, followed by Perth at 15.9%, Brisbane at 14.5%, and Sydney at 5.8%. Nationally, home values rose by 8.6% in 2025, marking the largest annual rise since 2021. However, momentum cooled toward the year's end as demand continued to outpace supply.
Sydney's median dwelling value now exceeds $1.28 million. Despite affordability concerns and expectations of potential interest rate rises, prices are predicted to increase by at least 5% over the next 12 months in 2026. SQM Research forecasts that capital city prices will rise 6-10% in 2026, driven by double-digit growth in Perth, Brisbane, Adelaide, and Darwin. AMP chief economist Shane Oliver anticipates 5-7% price growth in the coming year.
Two of the four major banks expect an interest rate increase at the Reserve Bank of Australia's February meeting, with none forecasting rate cuts. Rents increased by 5.2% in 2025, and the five-year average rent growth stands at 7.4%. Analysis from Finder shows worsening affordability as house prices have surged from about $64,000 to nearly $1 million and price-to-income ratios have climbed from approximately 3.3 times to more than 10 times. Investor lending also surged in 2025, contributing to the housing market dynamics. Supply response is expected to remain limited given these conditions.
