Home prices may be unrecognisable in two years, even with forecast modest price growth.
Australian homeowners have been told to brace for some confronting home prices in the years ahead, with prices soaring well above $1m in every major capital by the start of 2028.
KPMG forecasts released this week have revealed national home prices are expected to rise by an average of 7.7 per cent over 2026, with capitals like Perth and Brisbane forecast much higher growth. Similar growth was expected over 2027.
But analysis of the KPMG growth predictions using PropTrack median price data has revealed that even the more modest growth expected in some areas could push prices to new levels of extreme.
SEE PROJECTIONS FOR EACH CAPITAL BELOW
This included in Sydney, where house prices were tipped to rise 5.8 per cent over 2026 and 5.7 per cent over 2027 – well below the national average and below soaring growth levels of previous years.
But with the citywide median already at $1.62m, this level of growth will pull prices up by an average of $192,000 over the next two years, leaving the median house price at $1.81m by the start of 2028, the modelling showed.
Even more alarming was Brisbane, where the median house price was forecast to rise 10.9 per cent this year and another 8.9 per cent next year.
This level of growth would push the current Brisbane median house price of $1.15m to just short of $1.4m, a rise of nearly $240,000.
Such prices would likely mean Brisbane overtaking Sydney as the country’s least affordable capital given the lower household incomes in the Queensland capital relative to the Harbour City.
KMPG said continued price growth would be driven by housing shortages and the government’s expanded 5 per cent deposit scheme (First Home Guarantee).
KPMG chief economist Dr Brendan Rynne said the market has defied gravity.
“The strong momentum in the first half of 2025 should have moderated as affordability pressures continued to spook buyers,” Dr Rynne said.
KPMG chief economist Dr Brendan Rynne.
“But instead, the second half of last year accelerated growth further, especially in already overheated cities Perth and Brisbane.”
The driving force behind strong predicted home price growth in some areas is a severe mismatch between population growth and housing construction.
KPMG projects that housing supply will fall short of targets by roughly 30 per cent over the next two years.
“Despite the fact there aren’t enough houses being built, buyers in these cities are prepared to pay more than the supply shortage would justify,” Dr Rynne said.
Here is a city-by-city breakdown of what homes will be worth at the start of 2028 if forecast growth was modelled against current prices:
Melbourne on the rebound
Melbourne’s market is picking up after a period of stagnation, driven by “genuine underlying demand”. House prices were forecast 6.8 per cent in 2026 and 7.3 per cent in 2027.
With this growth, the median house price would hit $1.16m by 2028, a $148,000 rise from the current level of $1.01m.
Unit prices will increase to $708,641, a rise of over $82,000 from the current $626,000 median.
Melbourne home prices are expected to recover.
Dr Rynne pointed out that Melbourne’s sluggish performance in recent years has created a value gap.
“Melbourne’s comparatively lower price base compared to other capital cities is likely to provide room for further growth and help sustain momentum over the coming years.”
Perth to soar past million-dollar mark
Perth prices are expected grow nearly 13 per cent in the next 12 months alone.
With this level of growth, the median house price will reach $1.2m by the start of 2028, an increase of $187,000 from about $1m currently.
Units will hit a median of $753,000, up $103,000 in two years.
Perth has changed from one of the country’s most affordable cities to one of the most expensive.
“Perth continues to record the fastest population growth in the country and limited housing supply is keeping upward pressure on prices,” Dr Rynne explained.
Adelaide units to boom
Adelaide units are forecast to record the sharpest rise relative to current values, jumping an average of $114,000 over the next two years. This will mean the median unit price will be $746,000 by 2028.
Sluggish home construction is expected to put upward pressure on prices.
The median house price will reach $1.08m in 2028, up $114,000 from the start of 2026.
Dr Rynne said affordability issues were forcing a structural shift toward apartment living.
“Over the next two years, affordability issues are likely to maintain steady demand for units, particularly in capital cities where escalating prices have left a large portion of the population unable to purchase a detached house.”
Hobart to get modest recovery
Hobart is expected steady but slower growth. The median house prices will reach $825,000 by 2028, while the median unit price will be $650,000.
Sydney’s $1.8m benchmark
The Harbour City remains the heavyweight of Australian property, but entry costs are set to become even more punishing.
Housing shortages mean buyers still have to compete hard for properties in Sydney. Picture: Monique Harmer
By the start of 2028, the median Sydney house price will hit $1.81m, a staggering rise of $192,000 from the start of 2026.
Apartment prices are closing in on the million-dollar milestone, with the median unit forecast to reach $966,990, up $84,000 over two years.
Brisbane surge to continue
Explosive growth is predicted for Brisbane, which is shaking off its reputation as a cheaper alternative.
A typical Brisbane house would be worth about $1.4m by 2028.
Brisbane house prices are forecast to rise by $240,000 over two years, hitting a median of $1.388m by the start of 2028. It’s worth noting the median house price only recently surpassed $1m for the first time.
Unit prices will grow by over $100,000 to reach a median of $891,000.
“More and more people are making the move to Brisbane, but as with most other cities, housing supply has not kept pace,” Dr Rynne said.
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