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.”
As interest rates, inflation and market sentiment fluctuate, investors are being urged to focus on data, not panic.
Sydney Children’s Hospitals Foundation CEO Kristina Keneally says Australia’s culture of large-scale philanthropy is becoming more sophisticated as Gold Dinner raises $75.5 million for children’s health, research and innovation.
The Federal Budget has created a supply freeze that could push rents higher, reduce investment and hand more of Australia’s housing stock to offshore institutions.
4 min
For months, I have been one of the few commentators openly stating what the data was already showing: property prices had begun to fall.
The latest figures confirm it. Cotality’s June 1 Home Value Index showed Sydney values down 0.9 per cent in May and Melbourne down 0.8 per cent. ANZ has cut its national capital city forecast to 2.8 per cent growth this year, down from 4.8 per cent in April. CBA has also downgraded its outlook.
So the Federal Budget arrived at the worst possible time, with the wrong prescription, to treat a problem it fundamentally misunderstands.
Treasurer Jim Chalmers has suggested that making it easier for first-home buyers to get a fair crack at auctions is a good thing. The reality is more complicated.
Driving property prices down does not simply hand a discount to first-home buyers. It affects the 1.4 million Australians employed by the property sector, the 67 per cent of household wealth tied to housing, and the state government revenues that fund schools, hospitals and roads.
The government had a choice: tackle supply constraints, link migration growth to housing completions and reduce spending, or increase taxes on property investors. It chose the latter.
Property is an economic pillar
Property is not simply another investment class. It contributes about 10.6 per cent of GDP directly, up to 15 per cent when flow-on effects are included, and employs more than 1.4 million Australians. It also generates more tax revenue than mining and underpins consumer confidence through the wealth effect.
Against that backdrop, the Budget removed negative gearing from established residential properties purchased after Budget night and replaced the 50 per cent capital gains tax discount with cost-base indexation and a 30 per cent minimum tax from July 1, 2027.
The government calls this fairness. I call it a misdiagnosis.
The grandfathering trap
The policy is also internally contradictory.
Properties purchased before Budget night are grandfathered, allowing existing investors to retain full negative gearing and capital gains tax benefits until they sell. The logical response is simple: hold.
That means fewer properties coming onto the market, fewer rental listings and reduced transaction volumes.
The result is likely to be higher rents, reduced stamp duty revenue and further inflationary pressure at a time when the Reserve Bank remains focused on bringing inflation under control.
The government is attempting to fight inflation with one hand while fuelling it with the other.
Who really owns investment properties?
What is often lost in this debate is who Australia’s property investors actually are.
According to ATO data, 71 per cent of investors own just one investment property. They are not wealthy property moguls.
They are teachers, nurses, police officers and small business owners who have purchased an investment property as part of their retirement strategy.
For many Australians, property remains the most tangible and trusted pathway to building long-term wealth.
Removing the incentives that supported that investment does not hurt a billionaire developer. It hurts ordinary Australians trying to secure their financial future.
Investors aren’t the affordability problem
It is true that housing affordability has deteriorated significantly over the past two decades. However, negative gearing is not the primary cause.
Research by economists Ross Kendall and Peter Tulip found planning and zoning restrictions significantly increase housing costs.
Their work showed zoning lifted detached house prices well above marginal construction costs in Sydney, Melbourne, Brisbane and Perth.
Low interest rates, strong population growth, chronic under-supply and restricted access to development-ready land have all played a much larger role in pushing prices higher.
Punishing private investors does nothing to address these structural issues.
The Build-to-Rent advantage
At the same time the government is reducing incentives for Australian investors, it has created a more attractive tax environment for foreign institutional capital through Build-to-Rent projects.
Under current arrangements, foreign institutional investors can access a 15 per cent withholding tax rate through Managed Investment Trusts, accelerated depreciation benefits and exemptions from the new negative gearing restrictions.
State governments have added further concessions, including land tax reductions and exemptions from foreign investor surcharges.
Australian mum-and-dad investors receive none of these advantages.
The cumulative effect is striking. Foreign institutions can access a range of tax benefits unavailable to Australian private investors, while local investors lose concessions they have relied upon for decades.
This is not solving the housing crisis. It risks transferring ownership of Australia’s rental housing stock from local investors to offshore institutions.
Why state governments should worry
There are already signs these changes are affecting the credit cycle.
Major banks are removing negative gearing benefits from serviceability calculations for investment loans.
As market conditions soften, lenders become more cautious and investors find it harder to secure finance.
That matters because property transactions are a major source of state government revenue.
In NSW alone, transfer duty generates more than $12 billion annually. If transaction volumes fall significantly, the impact on state budgets will be substantial.
The consequences extend beyond stamp duty to GST collections, payroll tax receipts and land tax revenue.
The 95 per cent loan trap
There is another aspect of the Budget that concerns me.
The government has expanded first-home buyer deposit guarantee schemes, allowing eligible purchasers to buy with a five per cent deposit backed by the Commonwealth.
The intention is admirable. The timing may not be.
If prices in Sydney and Melbourne fall further, buyers entering the market with 95 per cent loan-to-value mortgages could quickly find themselves in negative equity.
They become trapped. They cannot sell without crystallising a loss, while the taxpayer guarantees the loan and the bank remains protected.
That is not wealth creation. It is a debt obligation.
After three decades working with debt and investment, I would never encourage my own children to borrow at a 95 per cent loan-to-value ratio.
A policy built on politics
The government had an opportunity to address the housing crisis by encouraging supply, reforming planning systems and reducing development costs.
Instead, it chose Robin Hood politics.
The optics may be appealing, but the economics are not.
Australians may ultimately pay the price through higher rents, weaker investment and a future in which an increasing share of the nation’s housing stock is owned by offshore institutions rather than local investors.
Paul Miron is the Co-Founder & Fund Manager of Msquared Capital.
Many of the most-important events have slipped from our collective memories. But their impacts live on.
When the Writers Festival was called off and the skies refused to clear, one weekend away turned into a rare lesson in slowing down, ice baths included.
