Owning a house remains the great Australian dream — though for many, that dream now sits further away from the city skyline. As property prices keep rising, the strongest growth in 2026 is expected to come from outer suburbs, where first home buyers and investors are chasing what’s still affordable.
Demand Moves to the Fringe
After a year of rapid gains, the housing market is cooling slightly, but the appetite for detached homes hasn’t faded. Analysts expect values in outer suburbs to keep climbing, even as interest rates edge higher.
Recent data from Cotality shows home values rose 9.7 per cent across capital cities in 2025, with outer suburbs leading the surge. In Perth, the newly rezoned area of Mandogalup topped the list with a 33 per cent jump in median prices, driven by its proximity to the CBD and new housing developments.
In Sydney’s outer south-west, Menangle Park and Gilead both recorded growth of more than 20 per cent, while Frankston North in Melbourne climbed by 21 per cent, details AFR. The pattern repeats across the country: buyers are being pushed outwards by affordability constraints, turning once-overlooked suburbs into hot markets.
The Affordability Squeeze
While the Reserve Bank of Australia prepares for potential rate hikes to rein in inflation, borrowing costs remain a key pressure point. Middle- and lower-income households are being forced to look further from the city centre to buy, and they’re increasingly competing with investors targeting the same areas.
Government initiatives like the First Home Guarantee are intensifying demand below the price caps — $1.5 million in Sydney, $950,000 in Melbourne, and lower elsewhere. In most capitals, the fastest-growing suburbs sit just under those thresholds, suggesting that affordability will continue to shape the market in 2026.
Detached Houses Still Rule
The market shift also underscores Australians’ enduring preference for standalone homes. Detached houses continue to outperform apartments and townhouses in price growth, reflecting not only lifestyle preferences but limited supply in newer suburban estates.
Even as more Australians embrace apartment living, the aspiration for space and a backyard remains deeply ingrained. Families, in particular, are trading shorter commutes for the freedom of detached housing — a trend that’s expected to continue through the year.
The Outlook for 2026
Property analysts anticipate slower growth than last year, but momentum in the affordable outer suburbs should hold firm. Investor activity remains high — around 40 per cent of all purchases — and may attract closer scrutiny from regulators if it doesn’t ease.
The higher end of the market is expected to flatten under rate pressure, but areas offering relative affordability are likely to keep outperforming. As housing supply struggles to keep up with demand, outer suburbs will continue to define where Australians can buy, build, and dream.
For most, the goal hasn’t changed — a home with space to breathe. The only difference is that the drive to get there just keeps getting longer.
