House Prices Defy the Odds
According to new data and forecasts cited by The Guardian, the national property market remains stubbornly strong after climbing nearly 9% in 2025. Analysts expect prices to rise by a further 5 to 7% over the next 12 months, fuelled by tight housing supply, population growth, and ongoing rental shortages.
The resilience of the housing market has surprised many, especially given that interest rates remain high and affordability continues to worsen. Yet, even with borrowing costs biting, demand for homes hasn’t cooled as much as expected.
Economists point to a lack of housing stock as the main reason prices keep defying gravity. Construction delays, high building costs, and limited new developments have kept the supply side weak — meaning buyers are still competing fiercely over what’s available.
Capital Cities Lead the Way
The price growth won’t be uniform across the country. Sydney, Perth, and Adelaide are expected to lead the gains, with property values in some suburbs already rising by as much as 10% annually. Melbourne may see more moderate growth as demand softens slightly, while Hobart and parts of regional Australia could experience flatter conditions.
Despite the regional variation, the overall trend remains upward. Analysts believe that without a significant boost to housing supply or a major shift in migration policy, prices will continue to climb through 2026.
Affordability Concerns Grow
For first-home buyers, the situation looks increasingly bleak. Rising prices and high interest rates have pushed the average national mortgage repayment to its highest level on record. According to analysts, the portion of income required to service a new home loan is now well above the long-term average.
Housing affordability has become a political flashpoint once again, with growing pressure on governments to address the crisis. Critics argue that existing incentives, such as first-home buyer grants and shared equity schemes, are doing little to close the gap between wages and property prices.
Outlook for the Year Ahead
While experts expect slower growth compared to last year, none predict a downturn. A modest increase in listings and a possible interest rate cut later in 2026 could help balance conditions slightly, but not enough to reverse the upward trend.
For now, the message is clear: the Australian property market is showing no signs of giving up its gains. For homeowners, it’s another year of wealth on paper. For aspiring buyers, it’s another year of watching the goalposts move just a little further away.
