Australian Property Market Predictions: Our Best Guesses for 2026 (Without a Crystal Ball)

In property circles, there’s a sense that everything in 2026 will mirror that of 2025. That property prices will keep heading north, that interest rate fluctuations will only benefit borrowers, that the economy is strong, stable and far from seeing notes of decline.

But will next year be a continuation of 2025? Will we continue to see a similar property market story in 2026?

Let’s see what the crystal ball says (not that we have one).

Residential property market in 2026

For many investors, 2026 still looks like a year of respectable price growth. According to a recent poll of analysts, the nation’s established dwelling prices are expected to rise by about 6.9 per cent in 2026, driven by that notoriously tight supply and robust demand.

Most capital city forecasts suggest a 5–7 per cent lift in 2026.

But the pace of growth compared to 2025 is one to watch out for. Rate cuts and supply constraints have fuelled the last few years’ demand, but affordability issues and interest rate uncertainty might pull back on the massively accelerated growth we’ve become accustomed to.

It’s worth debating whether we’re already getting close to the ceiling. While still a long way off the right levels, supply is gradually improving. Population growth, although still positive, might moderate. And the stock of debt across households remains high (something we flagged a fortnight ago). If the supply-demand balance begins to inch toward parity and borrowing capacity tightens, a medium-term softening or at least a sharp slow-down becomes a more credible scenario.

Interest rates in 2026 is a 50/50 bet

One of the biggest wildcards heading into 2026 is interest rates. Following cuts in 2025, the official cash rate currently stands at 3.60 per cent. But the path ahead is anything but clear.

On one hand, lower rates and supportive policies (e.g. low-deposit schemes) remain powerful tailwinds for housing demand. Some economists earlier in the year had expected further cuts to lift borrowing capacity and push prices higher.

On the other hand, inflation remains sticky enough that the reserve bank appears wary of loosening too far too fast. Further rate cuts are not guaranteed, and indeed a rate rise remains on the table if inflation, wages or cost pressures intensify.

Commercial property expectations in 2026

It’s not just residential real estate that could see a slight change of course in 2026. There is growing optimism in the commercial and industrial property markets, but with a shift in which segments are likely to outperform:

• Savills’ Spotlight on 2026 report says 2026 may bring more than A$50 billion in capital deployment across industrial, retail and “living-sector” assets (especially build-to-rent).
• Indeed, industrial & logistics are being widely tipped as the standout performers, given low vacancy rates and sustained demand driven by e-commerce, supply-chain reconfiguration and infrastructure investment.
• The broader sentiment across the commercial sector appears strong: the NAB Commercial Property Index recently hit its highest level in eight years.

In contrast, traditional office and under-performing retail or hospitality assets are likely to remain mixed. Occupancy rates, tenant demand and location quality will matter more than ever. Investors inclined to get into commercial property should thus be selective. We’ve typically said no to 99.9 per cent of assets that’ve come across our desk — perhaps others should adopt the same scenario if their appetite for risk is not substantial.

A pinch of salt

It’s not hard to find good news stories for investors and those looking to get into the market.

But investors should be wary of those overly positive sentiments, as if markets aren’t cyclical or that asset values could never drop. Before the 2008 global financial crisis, it seemed 99.9 per cent of market analysts were optimistic about the future, publishing their positivity in every news publication possible. A little bit of healthy scepticism would’ve gone a long way for the investors listening to their advice.

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