Property price growth to slow in 2026: economists
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More news: Economists are expecting property price growth to continue into 2026 but at a much slower pace, following an 8.6% national rise last year.
There were signs of weakness in December on Cotality data, with Sydney and Melbourne property values slipping 0.1%.
AMP chief economist Shane Oliver said some of the factors contributing to the marked slowdown in December would reverse over the coming months, saying the falls in property values have likely been "exaggerated by seasonal influences".
"However, the pace of gains is likely to slow from that seen in 2025 as the interest rate outlook has turned less favourable with talk that the next move in rates will be up, APRA starting to ramp up controls to slow risky or speculative lending and affordability is now worse than ever," Oliver said in a note.
He predicts growth, on a national basis, to end 2026 at around 5% to 7% year-on-year.
"This is based on our view that the RBA leaves rates on hold this year. But if rates start to rise again home prices could fall slightly," he said.
Cotality research director Tim Lawless also thinks the housing outlook is less optimistic for 2026 than 2025, citing uncertainty around inflation and interest rates, affordability constraint and a focus on household debt and credit policy.
But the research house thinks the downside effects will be offset by constrained supply, with few expecting a sharp uptick in new home completions.
Property prices surged 8.6% in 2025 but Sydney, Melbourne slid backwards in December
The news: Property values across Australia soared 8.6% in the 12 months to December 2025, with Darwin, Brisbane and Perth recording double-digit price growth. It was the strongest calendar year for property price gains since 2021.
But signs of weakness are emerging in the market as concerns about looming rate rises from the Reserve Bank and affordability constraints started taking some of the heat out of the nation's two biggest markets in December.
The numbers: On an annual basis, Darwin was the top performing capital city with dwelling values up 18.9%, followed by Perth (+15.9%) and Brisbane (+14.5%). Adelaide’s property values were up 8.8% over the year. Hobart recorded a 6.8% rise.
Sydney prices were up 5.8% over the year, with Canberra and Melbourne close behind with gains of 4.9% and 4.8% respectively.
Sydney’s median house price is now $1,280,613, with Brisbane the second highest at $1,036,323. Adelaide and Perth are both above $900,000.
On a combined basis, dwelling values in the capital cities increased by 8.2%. Regional Australian property values collectively increased 9.7%.
In December there was a notable slowdown in some cities.
Sydney and Melbourne both saw property values pull back, falling 0.1% over the final month of the year. Canberra values increased by 0.2%. Brisbane and Darwin both increased by 1.6%, while Adelaide and Perth surged 1.9%. Hobart prices increased 0.9%.
The combined capital city result for the month was 0.5% growth, compared to 1% for the regions.
The context: The top end of the market is slowing down fastest. On a national basis, the upper quartile recorded 0.2% growth in December compared to 1.1% for the lower and middle priced sections of the market.
This has been an ongoing pattern throughout 2025, with Cotality attributing this to affordability and serviceability pressures redirecting some home buyers towards the lower priced segments of the market.
What they said: “Renewed speculation that the rate-cutting cycle is over and the next move from the RBA could be a hike has dented housing confidence,” Cotality research director Tim Lawless said.
“A ‘higher for longer’ setting on interest rates, alongside a resurgence in cost-of-living pressures and worsening affordability pressures, looks to have taken some heat out of the market.”
The source: Cotality Home Value Index
