Australia\u2019s housing market is on the verge of a historic milestone, with median house prices in capital cities set to break the $1 million mark for the first time. With the housing boom showing no signs of slowing down, homeowners, buyers, and sellers alike are bracing for a shift. So, what\u2019s driving this surge, and what can we expect for 2026?<\/p>\n\n\n\n
Proptrack<\/a>\u2019s latest data forecasts a 6 to 8 percent rise in median capital city house prices in 2026, which will push the median price of homes above the $1 million mark. As of November 2025, the median price had already hit $979,000, a record high. If the predictions hold true, this will mark a historic achievement for Australia\u2019s housing market.<\/p>\n\n\n\n While that sounds like a big jump, it\u2019s not entirely unexpected. Despite the impressive rise in house prices, economists like REA Group senior economist Angus Moore say momentum is starting to moderate, reports Yahoo Finance<\/a>. The combination of tight housing supply, falling interest rates, and growing demand is fueling the market. However, Moore cautions that the rapid pace of growth seen in previous cycles\u2014like the 20 to 30 percent annual increases\u2014won\u2019t be repeated.<\/p>\n\n\n\n Despite concerns over affordability, demand remains robust. A variety of factors are contributing to the continuing upward trend. Population growth, income rises, and a recovery in borrowing capacity after 2025\u2019s interest rate cuts are all playing a role. With more Australians seeking to enter the property market and investor activity picking up, it\u2019s no surprise that prices are continuing their climb.<\/p>\n\n\n\n Perth and Brisbane are expected to lead the way in 2026. Perth benefits from population inflows and a tight rental market, while Brisbane, despite coming off “extraordinary growth<\/em>,” is projected to keep outperforming. Meanwhile, Sydney\u2019s price<\/a> growth will be more moderate, with a predicted increase of between 5 percent and 7 percent. However, affordability issues are likely to limit the demand to outer and middle-ring suburbs.<\/p>\n\n\n\nWhy Are Prices Still Rising?<\/h2>\n\n\n\n