Australia’s 2026 property market forecast is shaping up to be strong across most scenarios. Let’s unpack what the data actually tells us, where the risks lie, and which cities are expected to outperform.
This analysis is based on SQM Research’s annual Boom and Bust Report, authored by Christopher Joye. While this isn’t our data, we’re breaking it down to explain the key drivers, city-by-city forecasts, and the broader national outlook.
Population growth: The biggest driver
Population growth remains one of the strongest forces behind property price growth.
In 2024, approximately 445,000 people migrated to Australia. In 2025, the figure was expected to be between 440,000 and 480,000. For 2026, migration is forecast at around 390,000 people. While this is slightly lower, it remains well above historical averages.
With an average of 2.6 people per dwelling, Australia would need roughly 150,000 new homes just to accommodate next year’s population growth.
A key oversight: Demographics
One important factor not fully accounted for is Australia’s ageing population. Many older Australians now live in one- or two-person households rather than traditional family homes. This reduces the effective household size and means even more dwellings may be required than headline figures suggest.
Housing supply: Still not keeping up
SQM forecasts around 185,000 housing completions in 2026, which on paper suggests a slight surplus for the year.
However, this does not account for the existing housing backlog. Australia has missed construction targets year after year and remains well short of government supply requirements. In practice, supply shortages are likely to persist, particularly in the rental market, where conditions remain extremely tight.
National price growth scenarios
SQM outlines several possible economic outcomes for 2026.
The most likely scenario, forecasts a 6 to 10 per cent national dwelling price increase. This assumes a sluggish economy, inflation easing to between 2.5% and 2.7%, one to two interest rate cuts by mid-2026, and continued strong population growth.
If inflation remains sticky and rate cuts are limited or delayed, price growth is expected to slow to between 4 and 8 per cent, which is still historically strong.
In a global slowdown scenario, interest rates would likely be cut to stimulate the economy, resulting in property price growth of 6 to 10 per cent, similar to the base case.
In a best-case economic rebound scenario, where wages rise, inflation falls and interest rates decline more aggressively, dwelling prices could grow by 10 to 14 per cent. This outcome is considered less likely.
The key takeaway is that even the worst-case scenario still points to positive national price growth of around 4 to 6 per cent.
City-by-city forecasts
Perth is forecast to record growth of 12 to 16 per cent, making it Australia’s strongest-performing market. Population growth of around 2.3 per cent, severe housing shortages, extremely low vacancy rates, and rental growth of 6 per cent in 2025 are all contributing factors.
Brisbane is expected to see growth of 10 to 15 per cent. Vacancy rates remain below 1 per cent, rents have risen by 7 per cent, and listings are down 17 per cent. Affordability pressures mean many owners are holding their properties rather than upgrading, which continues to restrict supply.
Adelaide is forecast to grow by 10 to 14 per cent. Vacancy rates hover around 1 per cent, demand is estimated at 5,500 dwellings compared to supply of around 4,800, and the city remains relatively affordable compared to other capitals.
Darwin is expected to record growth of 12 to 16 per cent following a strong rebound of around 17 per cent in 2025. Rental growth of 8 per cent and major gas projects are driving demand. However, risks include limited economic diversity, reliance on large infrastructure projects, and a high proportion of first-home buyers in the market.
The Sunshine Coast is forecast to grow by 10 to 15 per cent, while the Gold Coast is expected to grow by 7 to 11 per cent. Both regions continue to benefit from lifestyle-driven demand and constrained housing supply.
Sydney is expected to record slower growth of 3 to 6 per cent. Affordability remains the primary constraint. While house prices in many premium suburbs have plateaued, apartments have outperformed houses over the past three years, and more affordable property types are expected to lead future growth.
Melbourne is forecast to grow by 4 to 7 per cent. High holding costs, land tax thresholds, and comparatively lower rental yields have reduced investor appetite. As a result, investor capital has increasingly flowed into more affordable, higher-yield markets such as Perth, Adelaide, and parts of Southeast Queensland.
Hobart is expected to grow by 4 to 7 per cent, while Canberra is forecast to see growth of 3 to 6 per cent.
Australia’s property outlook 2026
According to SQM’s outlook, Australia’s property market is forecast to grow between 4 and 14 per cent nationally in 2026, depending on economic conditions.
These forecasts are predictions, not guarantees. Outcomes will vary by location, property type and timing. Making informed, educated decisions and seeking guidance from experienced professionals remains critical.
We’ll revisit these forecasts in six to twelve months to see how closely the data tracks reality.