It’s that time of year again. We’re dusting off the crystal ball, pouring over the data and we take a hard look at where the winds are actually blowing.
Here’s how we see 2026 unfolding.
Inflation: The Deciding Factor
Inflation is the single most important variable in our 2026 outlook.
If it’s brought under control, interest rates can ease and property prices can move higher with confidence.
If inflation proves sticky, rate cuts stall and the risk of further increases remains.
Our view is that inflation will be harder to tame than many expect, only returning to around 3 percent toward the end of the year.
That keeps policy settings tighter for longer and caps how far prices can run.
Interest Rates
The million dollar question.
Our base case for 2026 is a relatively narrow range, from another cut of 0.25% or potentially two increases totalling 0.50%.
If we’re forced to plant a flag, we expect one rate increase, driven by inflation pressure rather than housing demand, but we’re hoping to be wrong.
National Property Prices
With inflation sticky but momentum still strong, we expect steady rather than explosive growth in 2026.
Our forecast is 7 to 10% national price growth, with a midpoint around 8.5 percent.
Not a boom, not a bust, but another year of upward pressure in a structurally undersupplied market.
Sales Activity and Listings
Rising prices tend to unlock supply and we expect sales volumes and new listings to increase through 2026.
As confidence builds and equity improves, more sellers are likely to come to market.
First home buyer incentives and ongoing investor demand should support transaction volumes, particularly in affordable price brackets.
Capital City Top Performers
Our top capital cities for 2026 are Darwin, Perth and Hobart.
Hobart is attracting renewed attention after being the furthest below its previous peak, while Perth continues to benefit from strong fundamentals.
Darwin leads the nation on rental growth and tightening supply.
We expect Adelaide to underperform, with affordability pressures starting to weigh on local demand.
Regional Markets
Regional markets should broadly follow their capital city counterparts. Our strongest regional picks include Western Australia, Tasmania, and lifestyle driven Queensland regions with ongoing population appeal.
Investor Activity
Investor lending is already at record levels and we expect it to continue rising in 2026.
Investor loans now account for more than 40 percent of new purchase lending, and history suggests this trend continues until either APRA intervenes or rates rise materially. First home buyer incentives may slow the pace, but they’re unlikely to reverse it.
Rents and Vacancy Rates
Rental growth is expected to moderate to around 4.5 percent, with vacancy rates finally easing slightly as migration slows and new supply gradually lifts.
Even so, vacancies remain tight by historical standards, keeping upward pressure on rents in most markets.
The Risks That Matter
The biggest risk to our 2026 property predictions is productivity.
Weak productivity, rising government debt and persistent inflation pressure reduce living standards and increase the likelihood of tighter monetary policy. Without meaningful improvement, inflation becomes harder to control and rates stay higher for longer.
The Bottom Line
Some of these predictions will age well. Others won’t. That’s always the case.
What matters isn’t predicting every number perfectly, but understanding the forces driving the market and how they intersect with your own strategy.
In 2026, inflation, rates, supply and productivity remain the levers that matter most.
Want to learn more? Listen to the Property Trio Podcast
Reach Out to Us
If you would like to discuss your next steps, property plans, and mortgage strategy, get in touch with us today. Our team of experts is here to guide you through the complexities of the market and help you achieve your property goals.
