If you’ve been thinking about buying a home, 2026 could be the year when prices truly soar. According to new forecasts, house and unit prices across Australia’s capital cities are set to break records, continuing their rise through the next few years. While many are still recovering from past market fluctuations, the future looks even more daunting for buyers hoping to snag a deal.
Home Prices Expected to Surge
In a report released by Domain and reported by The Age, house prices across the country’s combined capitals are predicted to hit new highs by the end of 2026. The typical Australian house is expected to rise by about 6%, reaching a median price of $1,339,267. For units, the forecast isn’t much better – a 5% increase, bringing the median price to $759,112.
But what’s driving this rapid rise in home prices? According to the report, a combination of lower interest rates, an expanding government deposit scheme, and improving household incomes are all fueling this upward trend. While these factors are expected to drive demand and push prices higher in the first half of 2026, there’s more to the story than just economic conditions.
Sydney and Melbourne Leading the Charge
Sydney, always a bellwether for the housing market, is expected to lead the price surge with a 7% increase in house prices, reaching a median of $1,924,430. Melbourne isn’t far behind, with a forecasted 6% increase, pushing the median house price to $1,170,168. But Sydney and Melbourne won’t be the only cities seeing big gains. Adelaide is expected to see house prices rise by 4%, while Brisbane, Canberra, and Perth are all projected to see a 5% increase.
Interestingly, unit prices are expected to grow faster in cities like Brisbane, where prices are expected to jump 7%. Affordability issues in these cities are pushing more buyers toward the relatively lower-priced unit market, which is why experts believe units will outperform house prices in the near future.
Will Affordability Hold Back the Surge?
While the forecasted price increases sound promising, affordability is expected to become a major hurdle. Some experts, including Domain’s chief of research and economics Dr. Nicola Powell, believe that growth will slow down in the latter half of 2026. As borrowing capacity tightens and interest rates remain unpredictable, many buyers might find it harder to keep up with rising prices.
Financial constraints will likely put a handbrake on the market’s growth, but Powell remains optimistic, noting that some markets will still see substantial gains. For example, outer suburban areas—those traditionally seen as more affordable—are expected to experience stronger house price growth as buyers flock to areas with relatively lower price tags.
The Big Question: Should You Buy Now or Wait?
If you’ve been eyeing the property market, now might be the time to act—if you can afford it. With prices set to rise in 2026, those who wait too long might find themselves priced out of the market. But as always, it’s crucial to consider your personal situation, including your financial stability, long-term goals, and the risks involved in buying in a rapidly appreciating market.
For those looking to buy in 2026, it’s clear that the landscape will be even more competitive. But with the right preparation, patience, and strategy, you can still navigate the rising prices and secure a good deal. Just be prepared for a potentially bumpy ride ahead!
