Property Prices Forecast to Rise 5-7% in 2026: Where to Buy

Despite the February rate hike to 3.85%, every major forecaster still expects Australian property prices to rise in 2026. ANZ's February Housing Outlook predicts 4.8% growth across capitals, KPMG forecasts 6.8% for houses and 7.3% for units, and AMP's Shane Oliver sees 5-7% nationally. The consensus is clear: prices are still going up — just not as fast as 2025's 8.6%. Here's what each analyst is forecasting for your city, what could change the picture, and what it means for your timing.

What the Major Forecasters Are Saying

Cotality's Tim Lawless offered a note of caution: "Most regions were losing momentum by year-end, suggesting a levelling out and potentially softer outcomes for 2026." But even the most conservative forecasts still point to growth — just at a slower pace than the 8.6% recorded in 2025.

City-by-City Forecasts

What's Driving Growth Despite the Rate Hike?

The February rate hike to 3.85% was widely expected to cool the market, but Sally Tindall from Canstar described it as "a speed bump rather than a full-blown brake on house prices." Here's why prices keep rising:

What Could Slow Things Down?

Despite the bullish consensus, several headwinds could soften the outlook:

• A May rate hike: CBA, Westpac, and NAB all expect another 0.25% rise in May, taking the cash rate to 4.10%. Canstar estimates this would reduce borrowing capacity by approximately $12,000 for individuals and $24,000 for couples.
• APRA's DTI caps: The new debt-to-income lending rules are limiting how much some borrowers can access, particularly in expensive markets.
• Affordability ceiling: At record price-to-income ratios, there's a natural limit to how far prices can stretch. Domain expects this to constrain growth in Adelaide, Brisbane, and Perth in the second half.
• Proposed CGT changes: The plan to reduce the capital gains tax discount from 50% to 25% is creating uncertainty for investors.

The Rental Outlook

Rents are also forecast to keep rising. CBRE projects apartment rents to surge 24% between 2025-2030 across capital cities. By 2030, 92% of two-bedroom apartments are expected to exceed $700/week, with a third exceeding $1,000/week.

For 2026 specifically, Domain expects house rents to pick up in Sydney, Melbourne, and Canberra, while unit rents are forecast to rise slightly faster than house rents due to affordability pressures pushing more tenants toward apartments. Our recent article on rents rising 3x faster than wages covers this in detail.

What This Means for Buyers

If every major forecaster is predicting prices to rise 5-7% nationally, waiting another year could cost you $30,000-$70,000 on a $600,000-$1,000,000 property. That said, the timing depends on your city:

• In surge cities (Brisbane, Perth, Adelaide): Growth is expected to be front-loaded to the first half. If you're buying here, sooner is better.
• In Sydney and Melbourne: Growth is more moderate at 3% but expected to accelerate in the second half. You have slightly more time, but don't wait for a crash that no forecaster is predicting.
• For investors: Units are forecast to outperform houses nationally (KPMG: 7.3% vs 6.8%). Melbourne and Brisbane units offer the strongest combination of growth and yield.

The Bottom Line

The rate hike has slowed growth, not stopped it. Every major bank, economist, and research house expects Australian property prices to reach record highs by the end of 2026. The debate is only about how much: somewhere between ANZ's conservative 4.8% and KPMG's more bullish 6.8%. For buyers, the math is simple — if prices are going up 5%+ and you're ready to buy, the cost of waiting is real.

Sources: ANZ February Housing Outlook; KPMG; AMP Capital (Shane Oliver); Domain; CoreLogic/Cotality; Canstar; Australian Broker News; NAB Housing Monitor