Australian housing shortage pushes house prices higher in 2026
New forecasts tip house prices will rise 7.7 per cent in 2026, as a demand surge at the affordable end collides with Australia's ongoing housing shortage.
www.realestate.com.auHere’s a concise update on recent Australian house price forecasts and what to watch.
Core takeaway
- Most credible forecasts through 2026 point to continued price improvement in several markets, with some caution about a potential slowdown or decline later depending on rate moves and demand/supply dynamics.
Key developments by source
- KPMG Residential Property Market Outlook (May 2026): Forecasts national house values up about 7.7% in 2026, with units up around 7.1%. This suggests solid momentum across the country despite affordability pressures.[9]
- Real estate and finance outlets in early 2026 highlighted a mix of signals: a housing shortage continuing to underpin price gains in many markets, alongside forecasts of moderation or modest declines in some cities if rate cycles curb borrowing or if affordability deteriorates further.[8][10]
- Cross-market cues from banks and research houses in late 2025–early 2026 pointed to sharp gains in certain capitals (e.g., Perth, Brisbane) and more tempered growth in Sydney and Melbourne, driven by supply constraints and fiscal policy impacts (first-home buyer schemes, tax settings).[1][2][5][7]
- Short-term outlooks vary: some forecasts anticipated continued growth through 2026, while others warn of a potential downturn if rates rise or economic activity slows in 2027, signaling a more cautious stance for longer-horizon planning.[3][5]
Implications for buyers and investors
- Short-to-medium term: Expect price gains in many markets, especially where housing supply remains tight and demand is supported by policy incentives or rate cuts that sustain borrowing power.[1][9]
- Risks to watch: Potential rate hikes, budget/tax policy changes affecting negative gearing or capital gains, and broader economic slowdowns could temper or reverse gains in some cities into 2027.[7][3]
- Affordability dynamic: Even with price growth, higher borrowing capacity from rate cuts can boost buyers’ finance options in the near term, though this may not fully offset price levels in high-demand areas.[5][1]
Would you like a city-by-city snapshot (Sydney, Melbourne, Brisbane, Perth, etc.) with the latest forecast ranges and the drivers behind each? I can pull the most recent figures and compare them side-by-side.