Australian Home Prices Expected to Rise 7% in 2026 as Supply Remains Tight

Post by : Saif

Australia’s housing market is heading into another year of strong price growth, with analysts predicting that home prices will rise faster than expected in 2026. A new Reuters poll of property experts shows that national home prices could increase by nearly 7% next year, driven mainly by tight supply, strong demand, and renewed confidence among buyers.

The country has been experiencing major shifts in its housing market over the last few years. During the COVID-19 pandemic, home prices jumped almost 40% as people rushed to buy homes with more space. But when the Reserve Bank of Australia raised interest rates to fight high inflation, prices fell around 9%. That decline did not last long. In 2025, the central bank cut rates by a total of 75 basis points. This made borrowing cheaper, attracting more buyers and pushing home values to a record high of A$872,538 in October.

The poll, taken between November 13 and 26, included 15 property analysts. They now expect prices to rise around 8% in 2025 and another 6.9% in 2026. This is a major upgrade from earlier predictions of 5% and 5.6%. The analysts believe this is the strongest upward revision made this year.

Cities like Sydney, Melbourne, Brisbane, Adelaide, and Perth are all expected to see price growth between 5% and 7% next year. Many experts say the main reason is the lack of available homes. Australia simply does not have enough properties to meet growing demand from immigrants, investors, and young families.

Michael Yardney, founder of the Metropole property advisory firm, said the interest rate cuts restored confidence and created a “fear of missing out” among buyers. He expects strong price growth especially in the first half of 2026, although things may slow slightly in the second half.

But while existing homeowners enjoy rising property values, first-time buyers continue to face greater challenges. Out of 11 analysts who answered questions about affordability, only two said things might improve for new buyers in the next year. Most said the situation will likely get worse.

The biggest problem for first-time buyers is the shortage of entry-level homes. The median home value in Australia is now nearly eight times the average annual income. High rents, slow wage growth, and the rising cost of living make it harder for young people to save for a deposit. Analysts also point to high construction costs, labour shortages, and long building delays as reasons why new affordable homes are not being completed fast enough.

Mark Dawson, director at Urbis, said that saving for a deposit has become very difficult for young Australians. He added that the construction sector cannot quickly increase the supply of low-priced homes because of material and labour challenges.

The government introduced a scheme that allows first-time buyers to purchase a home with only a 5% deposit. While this has helped some families, analysts warn it could increase demand without solving the main issue: the shortage of homes.

The Australian government has a major plan to build 1.2 million new homes by 2030. But experts doubt whether this goal can be achieved. Maurice Tapang, senior economist at the Housing Industry Association, said it is “impossible” to build that many homes within the next five years. He also warned that even if the target is met, it may still not be enough to catch up with the country’s growing population and housing needs.

As the market moves into 2026, one thing is clear: home prices will continue rising, and buying a house will remain a major challenge for many Australians. The pressure on first-time buyers shows no signs of easing, and the gap between those who own homes and those who do not is likely to widen even further.

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