Eleanor Creagh, Senior Economist, REA Future Brisbane at the Star. Friday October 17, 2025. Picture, John Gass
The only way is up for home prices in 2026, with experts predicting strong growth across all major metropolitan and large regional markets in Australia.
A chronic lack of supply, a boost in borrowing power from recent rate cuts and strong migration of recent years has some parts of the nation poised for a boom, with only potential rate hikes looking like slowing price growth down.
The December edition of PropTrack’s Home Price Index (HPI) showed annual growth in 2025 for all dwellings of 8.7 per cent.
And REA Group senior economist Eleanor Creagh said a number of market conditions that has caused that growth were still in place and not likely to change materially over the next 12 months.
“This year’s series of interest rate cuts, population inflows, investor activity and the expanded home guarantee scheme will continue to bolster demand along with upgrade activity,” Ms Creagh said.
“Meanwhile, stock on market has been pretty tight, despite an uplift (in November) with the spring selling surge.
“The delivery of new housing remains constrained, so conditions have been tilted towards sellers and I’d say that’s going to remain the case.
“Broadly, it looks like further price gains into summer, although the extended pause on interest rates and APRA’s cap on high debt to income lending is probably going to temper momentum into the first half of 2026 so we could see the pace of growth easing off slightly.”
One of the main factors keeping upward pressure on home prices is the dire state of construction.
MORE: Named: Aus’ shock new $3m suburbs exposed
REA Group senior economist Eleanor Creagh.
The latest housing figures from the Australian Bureau of Statistics revealed the number of home approvals had fallen 6.4 per cent month-on-month in October.
After nearly 18 months of the federal government’s housing accord, which aims for 1.2 million new homes by mid-2029, we are already more than 20 per cent behind.
“Building approvals, which are really the best case scenario of what gets built, are tracking well below target,” Ms Creagh said. “That will continue to put a floor under home prices for sure.”
More boom than bust
SQM Research released its annual Boom and Bust report in November, forecasting national home values to climb 6 to 10 per cent under a “base case” scenario, in which there are one or two rate cuts in the second half of 2026, a steady but sluggish economy and inflation between 2.5 and 2.7 per cent.
SQM managing director Louis Christopher said 2025 had been “a year of resilience” for real estate, “driven by strong population inflows and initial monetary policy easing”.
Mr Christopher noted 2026 had the potential to be a different landscape.
“The outlook is shaped by a range of potential economic paths, from a sluggish economy, through to sticky inflation delaying rate relief to a global slowdown; or even a robust economic rebound,” he said.
“Perth, Brisbane and Adelaide (are) poised for double digit growth in all cases due to their supply constraints and economic momentum.”
Mr Christopher anticipates Perth and Darwin will lead growth, with as much as 12 to 16 per cent, while Brisbane and Adelaide (10 to 15 per cent) are also poised to surge if there is another rate cut by the RBA.
MORE: Where you should’ve bought in Aus 10yrs ago
SQM Research director Louis Christopher predicts housing growth in 2026.
Meanwhile, Melbourne and Hobart could grow 4 to 7 per cent, with Sydney and Canberra both 3 to 6 per cent to the upside.
Top suburb picks
McGrath Estate Agents founder John McGrath made some bold predictions in his suburb hotspots list for 2026.
The regular feature of his annual McGrath Report pinpointed 20 suburbs he believes have potential for upside.
NSW
ASHBURY
“This wonderful pocket of Sydney’s Inner West is starting to edge up in value,” McGrath said. “Decent land allotments. Period homes. Great cafes emerging.”
TENNYSON POINT
“This little waterfront piece of paradise is nestled quietly next to wealthy neighbour Hunters Hill. Take a short drive to check out one of Sydney’s more charming waterfront enclaves.”
Newport Beach, Norah Head and Sans Souci also featured from NSW.
VIC
NORTHCOTE
“Northcote is an urban delight blessed with cosy bars, great restaurants and abundant public and active transport connections,” McGrath said.
ESSENDON WEST
“Located just 9km from the Melbourne CBD, and with just under a third of its area set aside as open space, Essendon West is a family-friendly suburb on the rise. Known for its strong community, spacious homes and parkland, top schools and excellent transport links.”
Other Victorian suburbs to make the list were West Melbourne, Box Hill and Carrisbrook.
QLD
COORPAROO
“With its vibrant village atmosphere, excellent connectivity and closeness to the Brisbane CBD, Coorparoo continues to show strong potential for capital growth,” he said. “Its mix of character-filled Queenslanders and sleek architectural homes attracts both families and professionals.”
MORE: Aussies in these 77 suburbs earn +$200k
John McGrath reveals his suburb picks for the year ahead. Picture: Julian Andrews
REDCLIFFE
“In Brisbane’s highly sought-after Moreton Bay region, Redcliffe offers strong investment potential driven by its coastal lifestyle appeal, ongoing infrastructure upgrades, and proximity to Brisbane CBD.”
Other Qld suburbs picked included Clear Island Waters, Peregian Beach and Mackay.
TAS
BATTERY POINT
“Despite its heritage charm and waterfront lifestyle, this prestigious suburb is now trading at a discount. Over the year to June 2025, Battery Point’s median house price fell 1.4 per cent to $1.38 million. Opportunity abounds just footsteps from Salamanca Market and Hobart CBD.”
MIDWAY POINT
“With the $47 million Hobart Airport Interchange complete and the $187 million causeway duplication progressing, Midway Point is becoming one of Hobart’s most connected suburbs.”
Other Tasmanian suburbs to make the list were West Launceston, Miandetta and Acton.
English (US) · 