2026 Australian property forecast: Why prices are set to rise & what it means for you

16 May

Australia's housing market is poised for continued growth over the next two years, with significant Australian property price rises anticipated by 2026. According to KPMG's latest Residential Property Market Outlook, while 2025 is expected to see modest increases, stronger gains are forecast in 2026. This 2026 property forecast is primarily driven by anticipated interest rate cuts and ongoing supply constraints, offering a clearer Australian property market outlook for buyers and investors.

📈 National Average Property Price Growth Forecast

KPMG projects the following national average price increases:

Houses: 3.3% in 2025, accelerating to 6.0% in 2026
Units: 4.6% in 2025, followed by 5.5% in 2026

Notably, unit prices are expected to outpace house prices for the first time, reflecting growing affordability pressures in major Australian cities and making units a key focus in the 2026 Australian property forecast.

🏙️ Capital City Highlights: Australian Property Price Predictions

The report highlights regional variations in Australian property price growth across capital cities:

Perth: Leading house price growth in 2025 with a 4.0% increase.
Sydney: Expected to dominate in 2026 with a substantial 7.8% rise in house prices.
Melbourne: Projected to see a 3.5% increase in 2025 and 6.0% in 2026.

These trends underscore the shifting dynamics in Australia's property market, influenced by local economic conditions and housing supply factors, providing crucial insights for those watching Australia's housing market predictions 2026.

🏘️ Key Factors Influencing the Australian Property Market Outlook

Several key factors are shaping the Australian property market outlook and contributing to the projected property price rises:

Affordability Constraints: Rising property prices have led buyers to consider units as more accessible entry points into the market, particularly in high-demand areas. Learn more about managing property affordability in our guide: [Link to your blog post about affordability/first home buyers]
Interest Rate Expectations: Anticipated interest rate cuts in the latter half of 2025 are expected to significantly boost buyer confidence and demand. Many are asking, "When will interest rates drop in Australia?" The consensus from experts like KPMG suggests a positive shift that will impact borrowing power.
Supply Challenges: Despite improving building approvals, actual housing completions are lagging due to ongoing construction delays and labour shortages. This contributes to persistent supply shortages, which will continue to underpin Australian property price growth.

📊 Rental Market Trends: A Glimmer of Relief

For renters, some relief may be on the horizon. KPMG forecasts rental growth to moderate to between 3.5% and 4.5% over the next two years, down from the peak of 7.8% observed in March 2024. This moderation reflects normalizing migration patterns and gradual improvements in housing supply.

💡 Implications for Buyers and Investors in the Australian Property Market

The projected trends suggest a significant window of opportunity for prospective buyers and investors looking at the 2026 Australian property market:

Units as Viable Options: With units expected to outpace houses in price growth, they present a more affordable and potentially lucrative investment, especially for those seeking entry into the market. Explore investment strategies for units here: [Link to your blog post about property investment/units]
Strategic Timing: Entering the market before anticipated interest rate cuts in late 2025 could be advantageous, allowing buyers to secure properties before increased competition.
Long-Term Planning: Understanding specific regional market dynamics is crucial for making informed investment decisions and maximizing long-term gains in the Australian housing market.

📅 Ready to Make a Smart Property Move?

Don't navigate the complexities of the Australian property market alone. Whether you're buying your first home, looking to refinance, or exploring investment options, Wizely Finance is here to guide you every step of the way.

👉 Book your free appointment here

Get expert advice, personalised support, and a hassle-free experience tailored to the current 2026 Australian property forecast.

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