Australian home prices 2026: New records forecast across capital cities

The tide of Australia's housing market shows no sign of turning, with Domain predicting record prices in each of the major capital cities in 2026.

Released this morning, Domain's forecast suggests that the median house value across Adelaide, Brisbane, Canberra, Melbourne, Perth and Sydney will rise by 6% over the course of the year to a new high of $1,339,267.

Unit values across the combined capitals are also expected to tick up by 5% throughout 2026 to reach a median price of $759,112.

As Nicola Powell, chief of research and economics at Domain notes though, the performance will vary from city to city.

"Australia's housing market is set for another strong year, with demand still high and buyers continuing to chase affordability, particularly in the unit market, which is expected to outperform in several cities."

Speaking of which, Brisbane is set to experience the largest growth rate in unit prices, with Domain forecasting a 7% jump in 2026. That's just half the growth rate recorded this year (14%).

Australia's most expensive property market - Sydney - is expected to record the highest growth rate in house values though.

Domain's outlook suggests that house prices will rise by 7% during 2026, pushing up the median value of a house in Sydney to a record $1,924,430.

What's driving home values higher?

In its report, Domain suggests that a number of factors are likely to contribute to further growth in property prices next year.

The three cash rate cuts made by the Reserve Bank and passed on by lenders this year have increased borrowing power among would-be buyers, as has the steady recovery of real incomes in recent years.

While the prospect of further rate reductions from the RBA is up in the air, Domain suggests that the rate reductions that have already been made are likely to help more buyers enter the market going forward.

Also on the demand side, the recently expanded First Home Guarantee Scheme is likely to generate additional demand in the entry-level market as first-time buyers look to take advantage of relaxed income and property price caps.

Domain notes that the expanded initiative could lift home prices by 3.5% to 6.6% in its first year, though the impact is expected to wane as the initial surge in buyers making use of the scheme tapers off.

Home prices are also expected to continue to grow as a result of ongoing supply constraints - both in terms of the number of homes being built and the number of listings coming on the market.

While the report suggests that the country's housing shortage remains acute, there may be some bright spots on the horizon.

"There are encouraging signs on the horizon, with new housing supply starting to come to market as building activity picks up," Powell says.

"While prices and rents will remain elevated, slower population growth, rising incomes and a cautious RBA should help the market move toward more balanced conditions by the end of 2026."

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