2026 property price surge: The states set to soar

Australia's housing market is heading into 2026 with confidence still intact. But where the confidence sits depends increasingly on where you live.

New research from property analytics firm Cotality shows 87% of the 1100 real estate and finance professionals surveyed for its Decoding 2026 report expect home prices to rise over the year ahead.

Almost half expect growth above 5% while just 3.5% are bracing for falls.

That optimism comes off a strong 2025. National dwelling values climbed 8.6%, adding about $71,400 to the median home, according to Cotality's Home Value Index.

PropTrack's numbers painted an even brighter picture, with homeowners up roughly $81,200 in equity over the year.

But the new year brought narrowed confidence.

"Housing conditions were strong through most of 2025," says Tim Lawless, Cotality's research director.

"However, national averages distort the variation of performances and market conditions at a local level, and it's those differences that are becoming more important as affordability and policy settings diverge."

Smaller states are doing the heavy lifting

The smaller states are shaping up as the standout markets heading into 2026.

Down south, the Apple Isle took the chocolates this year, with 92% of professionals forecasting the Tasmanian market to rise. However, three-quarters think the growth will be modest, under 5%.

In Queensland, 89% of respondents expect prices to rise, with half anticipating house price growth of more than 5%. In Western Australia nine out of 10 agents expect price increases and just less than half are forecasting those gains to be above 5%.

South Australia rounds out the top three, remaining comparatively cheaper than its eastern neighbours.

Lawless says the trends pushing this optimism has been in place for several years.

"Strong internal migration across Queensland and WA, relatively better affordability compared with Sydney, and a persistent shortfall in housing supply have combined to support stronger price growth, and those factors remain largely intact."

Conversely, Victoria is the state least likely to grow, according to professionals, with almost one third expecting growth below the national average.

At the end of 2025, Victorian dwelling values remained below their March 2022 peak as higher property taxes, reduced investor participation and a recent history of weaker interstate migration shaped market outcomes.

"Victoria stands out for the scale of investor selling," says Lawless.

"The cumulative impact of policy changes and higher holding costs has weighed on investor activity, even as first home buyers now account for the largest share of lending across the states."

For buyers, it reinforces the point that national numbers matter less than where you're buying.

It's also why understanding what a home is really worth (not just what prices are doing) has become more important.

First home buyers are active but boxed in by caps

Government support is still driving activity at the lower end of the market.

More than 75% of agents say buyer activity picked up after the expansion of the First Home Guarantee. Competition has been fiercest around scheme price caps.

Since October, more than 21,000 first home buyers have accessed the expanded 5% deposit scheme.

However, fewer than half of Australian suburbs now sit below First Home Guarantee price caps, down sharply from a year earlier.

It's one reason shared-equity options, such as Help to Buy, are drawing more attention, even as buyers weigh the trade-offs that come with them.

Crystal ball: What the big forecasts say

Cotality's outlook is broadly in line with other forecasts.

In November, SQM Research published a more bullish view of the market, with forecasts of some cities up as much as 21%. However, that was before calls for interest rate hikes ticked back up after inflation data dampened optimism.

More recently, Domain expects about 6% growth across combined capital cities in 2026 while realestate.com.au is tipping 6% to 8%.

The difference this time is what sits underneath those numbers. With affordability limits firmer and the cash rate less certain, performance will vary more widely by regional factors.

"The market is entering 2026 from a position of strength however there is a cloud of uncertainty around inflation and interest rate settings as well as affordability challenges, all of which are likely to weigh on housing confidence," says Lawless.

That uncertainty cloud comes with the caveat that predicting cash rates and property market forecasts are notoriously tricky at the best of times.

In March 2021, Philip Lowe, the RBA's then-governor and a key person in charge of managing the cash rate, said to Australians that the cash rate would remain at 0.1% until 2024. After inflation rose due to the lingering effects of the COVID-19 pandemic, the cash rate rose to its highest point in 13 years.

The point is that while we can take the best educated guess with the latest information available, but there is no crystal ball sitting at the tables of economists, the RBA, or at Parliament House.

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