Revealed: Where property values will grow the most in 2026
Australia’s housing market is expected to keep rising in 2026, but new research shows growth will increasingly depend on postcode, not postcode averages.
3 min
Confidence across Australia’s housing market remains firm heading into 2026, but momentum is expected to diverge sharply by state as affordability ceilings, interest rate uncertainty and local supply constraints reshape conditions, according to new research from Cotality and a broad range of market forecasters.
Findings from Cotality’s Decoding 2026 report, based on responses from real estate agents and finance professionals nationwide, show 87% of respondents expect dwelling values to rise over the year ahead, while just 3.5% anticipate prices will fall.
Almost half forecast price growth of more than 5%, highlighting ongoing optimism following widespread gains through 2025.
That outlook broadly aligns with forecasts from major banks and property research groups, including ANZ, Domain, PropTrack and SQM Research, with the majority of forecasters expecting national home values to rise again in 2026, albeit at a more moderate and uneven pace than in recent years.
Cotality’s December Home Value Index recorded price growth across every capital city and regional market in 2025, with national dwelling values rising 8.6%, adding around $71,400 to the median home value.
Cotality Australia Research Director Tim Lawless said conditions softened toward the end of the year as affordability pressures intensified and expectations around interest rates shifted.
“Housing conditions were strong for most of 2025, which explains the broadly positive sentiment,” Lawless said.
“However, national averages mask increasingly wide variation at the local level, and it’s those differences that are becoming more important as affordability constraints and policy settings diverge.”
Smaller States tipped to outperform
Queensland, Western Australia and South Australia continue to stand out as the most positively viewed markets entering 2026, both among industry respondents and external forecasters.
Cotality survey results show 89% of Queensland respondents expect prices to rise, with more than half anticipating growth above 5%.
That optimism is echoed by forecasts from ANZ, Domain and SQM, which expect Queensland to remain one of the stronger-performing markets nationally, supported by population growth, tight rental conditions and ongoing housing shortages.
Western Australia also features prominently in forecasts, with SQM Research projecting some of the strongest percentage gains nationally, while Domain and ANZ expect Perth prices to continue rising, albeit at a steadier pace than in 2025.
Broad-based demand across price points and relatively affordable entry levels are expected to support further growth.
South Australia’s outlook remains underpinned by relative affordability and limited new supply. Most major forecasters expect Adelaide dwelling values to rise again in 2026, though generally at a more moderate pace compared with Queensland and Western Australia.
“Strong internal migration, tight rental markets and a persistent undersupply of housing continue to support these markets,” Lawless said.
“Those fundamentals largely remain in place, which helps explain why both agents and forecasters remain optimistic about price growth across much of the country outside the east coast’s largest cities.”
NSW and Victoria face tighter constraints
While sentiment in New South Wales remains positive, expectations are increasingly conditional. High dwelling values, stretched borrowing capacity and sensitivity to interest rate movements are expected to limit the pace of growth.
ANZ, Domain and PropTrack all forecast continued price increases in Sydney in 2026, though at a more moderate pace than recent years, reflecting affordability ceilings and rising listings.
Victoria continues to lag national performance after recording the weakest growth among the states in 2025. Although most forecasters still expect Melbourne home values to rise in 2026, expectations remain subdued relative to other capitals.
Higher property taxes, reduced investor participation and softer population growth continue to weigh on confidence, despite first home buyers accounting for a larger share of lending.
“Victoria stands out for the scale of investor selling, policy settings and higher holding costs, all of which have dampened activity,” Lawless said.
“While prices are still expected to trend higher, most forecasters see Victoria underperforming the national average again in 2026.”
First home buyer support lifts activity, but affordability bites
More than 75% of real estate agents reported increased activity following the expansion of the First Home Guarantee, with competition intensifying around scheme price thresholds.
Federal Treasury data shows more than 21,000 first home buyers have accessed the expanded 5% deposit scheme since October*.
However, affordability remains a key constraint, with fewer than half of Australian suburbs now priced below First Home Guarantee caps, a sharp decline from a year earlier.
Confidence holds, but risks are building
While expectations for price growth remain broadly positive across most forecasts, confidence is becoming more conditional as affordability ceilings, interest rate uncertainty and uneven regional dynamics shape the outlook.
“The market enters 2026 from a position of strength, and the majority of forecasters still expect dwelling values to rise,” Lawless said.
“However, affordability challenges, interest rate uncertainty and policy settings are likely to cap the pace of growth, particularly in higher-priced markets.
“With no material supply response expected in 2026, tight housing conditions should help offset downside risks, but outcomes will increasingly depend on local market dynamics rather than national trends.”
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New research shows a widening divide across Australia and New Zealand’s property markets, with investors increasingly forced to look beyond traditional strongholds to find real returns.
3 min
By any traditional measure, Australia’s property market should be moving in sync. Instead, it is fragmenting.
New research from MaxCap, led by Head of Research Bruce Wan, paints a picture of a market no longer defined by national trends, but by sharp regional divergence, where performance gaps between cities are widening, and the smartest capital is moving accordingly.
At the top end of the ladder, Perth and southeast Queensland are surging ahead. At the other, Melbourne and Auckland are only just beginning to recover from recent downturns. And sitting squarely in the middle is Sydney, steady but constrained.
The takeaway is clear: the era of relying on headline markets is over.
The rise of the unexpected leaders
Brisbane and the broader southeast Queensland region have emerged as standout performers, driven by population growth, infrastructure investment and a sustained undersupply of housing.
According to the report, housing values in the region have continued to accelerate, supported by long-term tailwinds including the 2032 Olympic Games and a decade of relatively subdued price growth prior.
Perth is telling a similar story, albeit for different reasons. Once heavily tied to commodity cycles, the Western Australian capital is now benefiting from a broader base of economic drivers, including defence spending and sustained resource sector strength.
The result is a housing market that remains one of the strongest in the country, even as price growth begins to ease from its peak.
Sydney holds, but doesn’t lead
For Sydney, the story is more nuanced.
While prices continue to climb and the city remains Australia’s most expensive market, affordability constraints are clearly limiting its pace. Residential growth, while positive, lags behind smaller capitals, and commercial sectors are being held back by softer demand in key industries.
There are, however, signs of momentum building. New infrastructure, including the western Sydney Airport and expanded rail networks, is expected to unlock development opportunities and support future growth, particularly in emerging precincts.
Still, the report positions Sydney firmly in the “middle of the pack”, no longer the automatic frontrunner for investors.
Melbourne’s slow reset
Melbourne, once a consistent performer, has spent recent years recalibrating.
Extended lockdowns, combined with new state property taxes, have weighed heavily on investor sentiment and pricing, particularly across the commercial office sector. Residential values have also underperformed, though for different structural reasons.
Now, there are early signs of recovery.
Improved affordability, population growth and a stabilising economic backdrop are beginning to draw buyers back into the market, with both residential and commercial sectors showing tentative signs of improvement.
Auckland’s turning point
Across the Tasman, Auckland has faced its own challenges, particularly from an outflow of younger workers to Australia, which has dampened demand and stalled price growth.
But here too, the tide appears to be shifting.
A return to positive migration, lower interest rates and policy changes — including the easing of foreign buyer restrictions — are expected to support a gradual recovery, alongside renewed interest from offshore capital.
A market that rewards precision
If there is one unifying theme, it is this: broad-brush strategies no longer work.
MaxCap’s research highlights that the most compelling opportunities are increasingly found outside the traditional powerhouses of Sydney and Melbourne, requiring investors to take a more targeted, locally informed approach.
“Given these persistent performance gaps, there is plentiful scope for alpha returns, just by picking the right locations and market segments,” the report notes.
In other words, success in this market is no longer about being in property — it is about being in the right property, in the right place, at the right time.
And increasingly, that place may not be where you expect.
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