Sydney’s Western suburbs are set to be the city’s highest performing hotspot in 2026, according to a new report from SQM Research.
SQM Research managing director Louis Christopher’s Housing Boom and Bust Report 2026 claims that Western Sydney hotspots like Blacktown, Penrith and Liverpool are set to outperform the rest of Sydney in the new year.
According to the report, these suburbs will benefit from their proximity to the Western Sydney Airport, which is set to drive job growth, infrastructure uplift and demand.
Blacktown, Penrith and Liverpool are predicted to be Sydney’s 2026 hotspots. Pictures: NCA NewsWire/Gaye Gerard; NCA NewsWire/Gaye Gerard; Supplied.
Each of these suburbs currently sit in the $1m range, with the median house price in Blacktown being $1.085m, Penrith’s being $980,000 and Liverpool’s sitting at $1.178m.
Liverpool’s median house price has notably shot up 13.3 per cent in the last 12 months.
Mr Christopher predicts potential house price gains of 5-8 per cent for Western Sydney amid the area’s rising connectivity.
This is a strong outlook for the West, with the report only predicting a modest 2-3 per cent price increase across the whole of Sydney for 2026.
MORE: New tax rules that could cost owners thousands
The Western suburbs will benefit from infrastructure like the Western Sydney International Airport. Photo: NewsWire/Gaye Gerard.
According to Mr Christopher, Sydney’s South West and North West will also outperform the rest of the city in terms of growth.
The report predicts that affordable South West corridors such as Mount Druitt, Campbelltown and Oran Park, benefiting from the First Home Guarantee Scheme, will rise between 4 and 7 per cent.
Meanwhile, North West pockets like Rouse Hill and The Ponds have been predicted to rise between 4 and 6 per cent, owing to metro expansions and family appeal.
Rouse Hill’s current median house price is $1.46m, while The Ponds’ sits at $1.615m.
MORE: Man’s wacky marriage proposal at home inspection
This home on Moore St, Liverpool, sold for $1.2m on October 28.
According to the report, public expenditure will continue to drive NSW’s economy in 2026, with Sydney as the epicentre for federal and state government operations, finance, professional services and tech hubs that drive a hefty chunk of national output.
The city’s growth will also be underpinned by a tourism recovery, as well as major infrastructure like the Western Sydney Airport and Sydney Metro expansions.
According to Mr Christopher, challenges will come in the form of high debt and subdued private investment, which will temper the state’s economic outlook.
MORE: It’s double: Real cost of Sydney homes exposed
This home on Mount Druitt’s Lisbon St sold for $1.162m on November 21.
According to Mr Christopher, population growth is expected to ease in 2026, with an increase of approximately 65,000-75,000, or 3-6 per cent for Greater Sydney, driven largely by overseas migration as interstate outflows continue.
“Sydney’s population grew by around 1.23 per cent in the year to mid-2025, reaching about 5,248,790, which my estimate translates into additional demand for some 25,000-26,000 dwellings,” Mr Christopher said.
“Over the same time, around 20,000-22,000 dwellings were completed – with a focus on apartments in inner precincts – pointing to a slight shortfall that’s keeping pressure on the market.”
MORE: Is Zac Lomax already splashing millions in R360 cash?
Population growth is set to ease in Sydney, according to SQM Research. Picture: NewsWire / Nikki Short.
Even with migration cooling, the report states that Sydney’s “chronic undersupply” can sustain rental strain, but the risk of rentals becoming overvalued are mounting.
Rental vacancy rates have hovered low at around 1.4 per cent this year according to SQM Research, with house rents reaching record highs of $1,100 per week.
MORE: Ricki-Lee buys new $3.5m Sydney home
Sydney weekly rent prices are predicted to keep rising. Source: SQM Research.
Dwelling commencements, remaining hampered by high costs and a projected drop in apartment starts, suggest the rental market will stay tight over 2026, potentially spurring more rent hikes despite earlier 2025 signs of easing growth, the report states.
Overall Mr Christopher predicted “another steady year” for Sydney’s housing market, with overvaluation in prices and rents potentially capping its upside.
MORE: NRL legend Paul ‘Fatty’ Vautin’s $3.5 million retirement boost
English (US) · 