A new report has found affordability across Australia’s capital cities just improved - despite three rate hikes, surging rents and a cost-of-living crunch that pushed inflation expectations to a 16-year high.
The PRD Smart Moves: Capital Cities Edition 1st Half 2026 report - covering Brisbane, Sydney, Melbourne, Hobart and Adelaide - found a meaningful shift in the share of suburbs buyers can realistically access, with units leading the charge and first home buyers the primary beneficiaries.
Surprise affordable suburbs lists emerged in new PRD research.
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PRD chief economist Dr Diaswati "Asti" Mardiasmo
PRD chief economist Dr Asti Mardiasmo said the findings reflected genuine shifts across all five markets, with units the clearest entry point for buyers in Sydney, Brisbane, Melbourne and Adelaide.
She noted the most affordable suburbs tended to carry less new housing stock - buyers seeking a brand-new home would generally need to pay closer to the city median to get it.
In Sydney and Melbourne, the shift has largely been driven by unit prices falling - affordability opened up because vendors are accepting less, not because buyers have more.
In Brisbane and Adelaide, the opposite is true: prices are rising strongly, but from a base that still sits below the metro median.
In Hobart, the story is simpler - it remains, by a wide margin, the most accessible capital city for house buyers in the country.
SYDNEY
Where Sydney stands in PRD's Smart Moves - Capital City Edition 1st Half 2026. Source: PRD
PRD said units remain the most accessible entry point for Sydney buyers, with the share of affordable suburbs now exceeding half of all tracked suburbs for the first time.
But it warned once new housing supply is factored in, the list of genuinely affordable Sydney suburbs with ready-to-sell stock shrinks sharply - driven by higher price points attached to new developments in the city.
Sydney’s affordable unit suburbs now exceed half of all tracked suburbs for the first time. Picture: NewsWire / Damian Shaw
Buyers prioritising new stock will pay a premium, PRD said. while those prepared to consider established stock will find the widest range of options the market has offered in years.
The tables showed Sydney remains the hardest market in the country for house buyers - just 11.6 per cent of tracked suburbs come in below the city’s $1,601,782 metro median, and every one of them sits in the city’s west.
But its unit market share of affordable suburbs jumped from 36.9 per cent in the second half of 2025 to 50.6 per cent in the first half of 2026. A year ago barely one in three Sydney unit suburbs cleared the affordability threshold, now it’s more than half.
Top Sydney house results in PRD's Smart Moves - Capital City Edition 1st Half 2026. Source: PRD
Top Sydney unit results in PRD's Smart Moves - Capital City Edition 1st Half 2026. Source: PRD
The mechanism is price correction. Seven of the ten suburbs in PRD’s Sydney unit shortlist recorded flat or negative price growth over the period - allowing buyers to find more options because unit values fell, not because the city became more generous. That window could close quickly if the rate cycle turns.
The standout was Granville on both the house and unit tables - the only suburb to appear on both lists - with a $1,221,000 house median and $520,000 unit median, 768 new dwellings in the pipeline and access to every amenity.
Bankstown carries the largest single project pipeline on either Sydney table at $1.395 billion with 474 ready-to-sell dwellings, while Parramatta’s unit pipeline is in a class of its own at $5.79 billion.
BRISBANE
Brisbane numbers in PRD's Smart Moves - Capital City Edition 1st Half 2026. Source: PRD
PRD believes that unlike Sydney and Melbourne, where price growth is starting to stabilise, Brisbane’s price rises will continue, but it found new housing stock predominantly in suburbs with median prices at or above the Brisbane metro benchmark, limiting affordable entry points for buyers seeking new builds.
PRD describes this as a defining trade-off for Brisbane buyers in 2026 - sacrificing affordability to secure new housing availability, or accepting an established product to access a more competitive price point.
Brisbane growth is set to continue its momentum with units buyers twice as likely to find an affordable suburb than house buyers now. Picture Lachie Millard
For buyers who move now, the combination of below-median pricing and strong growth trajectory makes Brisbane’s affordable suburbs among the most compelling in the country - but PRD warns the window is tightening.
Where Sydney and Melbourne unit buyers are benefiting from price corrections, Brisbane’s affordable suburbs are holding below the metro median despite recording some of the strongest price growth in the dataset.
Among strong performers are Taigum up 14.0 per cent, Banyo up 14.3 per cent, Arana Hills up 15.0 per cent, Lawnton up 17.8 per cent.
These are affordable despite rising, which means the entry point is narrowing rather than widening.
Top Brisbane house results in PRD's Smart Moves - Capital City Edition 1st Half 2026. Source: PRD
Top Brisbane unit results in PRD's Smart Moves - Capital City Edition 1st Half 2026. Source: PRD
In the unit market, the same dynamic applies with Spring Hill recording 33.3 per cent growth over the period and still sits at $640,000 - well below the city’s $876,474 unit median.
Bowen Hills and Fortitude Valley both recorded growth above 20 per cent, with Brisbane unit buyers now more than twice as likely to find an affordable suburb than a house buyer - but that gap is closing.
South Brisbane carries the largest unit pipeline on the Brisbane table at $963.75 million with 1,583 ready-to-sell dwellings - the biggest single-suburb supply number in the entire dataset.
MELBOURNE
Melbourne results in PRD's Smart Moves - Capital City Edition 1st Half 2026. Source: PRD
The surprise finding was Melbourne now positioning itself as a prime destination for buyers looking for value and choice. The unit market in particular is delivering a combination of below-median pricing, competitive yields and genuine new supply that PRD sees as rare in the current environment.
Melbourne is not traditionally viewed as an affordable market, but current conditions tell a different story - and the breadth of the suburbs on the Smart Moves list, spanning inner, east, south, west and north, signals that the correction has been geographically wide rather than isolated.
Melbourne is the surprise value destination now.
It’s affordability is drive by its post-pandemic correction - with units in suburbs many buyers assumed were out of reach sitting well below the metro median and generating yields that outperform every other city in the study.
Eight of ten suburbs in PRD’s Melbourne unit shortlist recorded flat or negative price growth over the period. Hawthorn was down 6.0 per cent, St Kilda down 7.5 per cent, Preston down 7.4 per cent, Ormond and Coburg both down more than 9.0 per cent.
All are established, well-serviced inner and middle-ring suburbs that buyers have been priced out of for the better part of a decade - and now find accessible because the market gave ground.
Top Melbourne house results in PRD's Smart Moves - Capital City Edition 1st Half 2026. Source: PRD
Top Melbourne unit results in PRD's Smart Moves - Capital City Edition 1st Half 2026. Source: PRD
Abbotsford stands apart as the only suburb on the Melbourne unit table to record positive price growth alongside a 7.0 per cent rental yield and a vacancy rate of just 0.3 per cent - the tightest rental market in the entire dataset. For investors, it is the standout result across all four cities.
Melbourne also leads all four capitals in the share of affordable unit suburbs that also carry new housing supply, at 36 per cent - giving buyers both the value and the product choice that Sydney and Brisbane cannot match at comparable price points.
HOBART
Hobart numbers in PRD's Smart Moves - Capital City Edition 1st Half 2026. Source: PRD
Of all four capitals surveyed, Hobart stands apart given its offering of near-equal affordability across both houses and units - a combo no other market can currently claim.
PRD sees Hobart as the clearest expression of what genuine affordability looks like in 2026: a city where the entry price remains within reach for buyers who have been priced out of the mainland, where vacancy rates are among the tightest in the country, and where the unit market in particular is producing value through correction rather than speculation.
Hobart is the only capital of the four surveyed where houses and units are equally affordable.
The Hobart market is characterised by lower transaction volumes than other cities, which PRD notes as reflective of market size rather than a weakness in underlying demand.
More than half of all shortlisted suburbs in Hobart come in below the city median, which no other capital can match.
Risdon Vale, at a $510,000 median, is the cheapest house suburb in the entire dataset across all four cities. Warrane, Rokeby and Moonah all sit well below the $796,682 metro median with stable vacancy rates and modest positive growth.
Top Hobart house results in PRD's Smart Moves - Capital City Edition 1st Half 2026. Source: PRD
Top Hobart unit results in PRD's Smart Moves - Capital City Edition 1st Half 2026. Source: PRD
Hobart is not a correction like Sydney and Melbourne, not a momentum story like Brisbane but a city where the base price level simply remains the most accessible in the country.
It excels in unit affordability segment, where prices in several suburbs have fallen - Moonah down 8.1 per cent, Lenah Valley down 11.1 per cent - because the market has room left to give.
Hobart units represent some of the most genuine value in the country, with PRD noting it has the thinnest transaction volume of the four cities.
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