Australia’s housing market is set to enter unprecedented territory, with both house and unit prices in every capital city projected to hit new all-time highs by the end of 2026, according to Domain’s Forecast Report 2026, released on Thursday.
The report estimates that the median price of a typical house across the combined capital cities will rise by 6% next year, reaching a record $1,339,267. Unit prices are expected to follow suit, jumping 5% to a new median of $759,112.
Dr Nicola Powell, Domain’s Chief of Research and Economics, said the market is positioned for another strong year.
“Our expectations are prices are going to continue to rise next year, both for houses and for units … all capital cities are going to be at new record highs by the end of next year,” she said.
Major capitals to lead the surge
Sydney is forecast to record the steepest house price rise in 2026, up 7% to a median of $1,924,430. Melbourne is predicted to grow by 6% to a median $1,170,168, with Powell noting that both cities will drive much of the national uplift due to their sensitivity to cash rate movements.
By the end of next year, Melbourne is expected to have fully recovered in both house and unit prices.
Other capitals are also projected to gain ground:
- Adelaide: house prices up 4%
- Canberra, Perth, Brisbane: each up 5%
Unit market gaining momentum
For units, Brisbane is forecast to be the nation’s price-growth leader, with values expected to jump 7% to $789,764. Perth and Adelaide follow with 6% and 5% increases, respectively.
The report highlights that affordability pressures are pushing more buyers towards units, which remain comparatively less expensive than detached homes. Unit prices are expected to outpace house price growth in Brisbane, Perth, and Adelaide throughout 2026.
Sydney and Melbourne unit prices are each expected to climb 4%, while Canberra units will rise by around 3%.
Industry forecasts remain broadly aligned
Domain’s projections are consistent with those from the major banks. For 2026:
- ANZ predicts a 5.8% rise in capital city prices
- CBA expects 4%
- NAB has forecast 6%
- Westpac predicts a stronger 9% increase across the five largest cities
ANZ economist Madeline Dunk said that although the market retains strong momentum — driven by rate cuts, the First Home Buyer Scheme and continued undersupply — affordability will act as a natural brake. “We won’t see the kinds of price gains we saw a couple of years ago,” she said.
AMP’s chief economist Shane Oliver has revised his national house price forecast for 2026 from 8–10% growth to a likely 8%, citing worsening affordability and a Reserve Bank cautious about reducing interest rates.
Rental prices also set to hit new highs
In line with home prices, capital city rents are projected to reach record levels by late 2026.
- Sydney: house rents up 4% to $815 a week; units up 5% to $792
- Melbourne: house rents up 2% to $595; units up 3% to $597
Meanwhile, research by the Australian Housing and Urban Research Institute revealed that a lack of government support services leaves most temporary migrants dependent on the private rental sector, with only 1.6% accessing social or community housing.
