Shock house price predictions for 2026, Sydney median nears $2 million

House prices will soar through the first half of 2026 by 10 per cent in Sydney and Brisbane over the 2025-26 financial year, and 8 per cent in Melbourne, leaving the Sydney median just a shiver under an astounding $2 million by the year’s end.

The latest Domain Forecast Report predicts that both house and unit prices will set records in 2026, boosted by the three cash-rate cuts and the expanded First Home Guarantee scheme.

On the plus side, however, there’ll be modest real income growth to help offset some of the pain, and affordability challenges will start to slow price growth momentum in the second half of next year.

Auction | Greg Haimandos

81 Church Street, St Peters NSW 2044

3

1

-

View property

“It really is going to be a tale of two halves in 2026. There’ll be really strong price growth during the first half of next year but that narrative will shift towards the end of the year,” says the report’s author, Dr Joel Bowman, senior economist at Domain.

“The change from rapid growth to steady growth will be welcome news for many.

“The double-digit growth we’ve been seeing for house prices in Sydney and Brisbane is unsustainable. But we’re also seeing very strong unit price growth in Brisbane of 13 per cent over this financial year,” Bowman says.

There’s not much relief for renters, either, with rents also forecast to remain on a sharp upward trajectory.

The new report calculates that the Sydney median house price will reach $1,924,430 by the end of 2026, with all the other capital cities topping the million-dollar mark.

$1,200,000 - $1,300,000

15 Fielding Street, Yarraville VIC 3013

3

1

-

View property

Melbourne will continue its recovery to hit $1,170,168, Brisbane will come out a little higher at $1,185,983, Canberra will end on $1,178,409, Adelaide on $1,107,646 and Perth on $1,046,680.

With houses so expensive, unit prices are expected to outpace house price growth in Brisbane, Adelaide and Perth as more buyers hunt for affordable alternatives.

Major infrastructure projects underway in Brisbane, including for the 2032 Olympics, are impacting both demand and supply.

“I completely agree with those levels of forecast price growth and, at the moment, Brisbane is the fastest growing capital city, outperforming both Sydney and Melbourne,” says PRD chief economist Dr Diaswati Mardiasmo.

“There’s not enough stock and not a lot of new development, so that undersupply is speeding up the Brisbane market.

“We also see Sydney ending up next year close to a median house price of $2 million. But the saving grace in all of this is that the growth won’t be as frantic with FOMO as it might have been with more cash rate cuts.”

Auction

3/81 Norman Street, East Brisbane QLD 4169

4

2

2

View property

Stability in the cash rate, with inflation running higher than expected, especially given the prospect of increased spending on Christmas shopping and school holidays, will further encourage people to make decisions to enter the housing market, Mardiasmo says.

Agents throughout Australia continue to see strong demand for property, particularly from first-home buyers who are buoyed by the First Home Guarantee, and a national shortage of listings, which is driving up prices.

Angus Raine, executive chairman of the Raine & Horne Group, says listings are 18.3 per cent below the average for this time of year, while the grants are boosting demand, which is having a ripple effect on prices through all levels of the market.

“The grants are just pouring fuel on a fire that’s already burning, and inflaming the situation,” he says.

“With the shortage of stock, we’re seeing empty-nesters reluctant to leave their homes as they can’t find anywhere to move into.

“The imbalance between supply and demand is continuing to push up prices. The government should instead be encouraging people to sell, and free up those family houses for the next generation, by perhaps providing an exemption on stamp duty for the next 24 months.”

Auction Guide $1,300,000

123 Lord Street, Newtown NSW 2042

2

1

-

View property

Meanwhile, Sydney house prices are forecast to record the strongest growth of any capital, with an increase of around $173,000 from current levels. Melbourne prices will be $87,000 higher, signifying a full recovery from its 2021 pandemic price peak.

Unit prices are expected to rise significantly throughout Australia, resulting in record median prices in every capital city. In Brisbane, with a 13 per cent increase over the 2025-26 financial year, the price is predicted to reach $789,764 by the end of 2026. Adelaide and Perth may both experience an 11 per cent rise, resulting in medians of $681,423 and $612,680, respectively.

Guide $800,000

26/168-172 Goulburn Street, Surry Hills NSW 2010

1

1

1

View property

Meanwhile, Sydney units will rise by 7 per cent to $891,972 by year’s end, Melbourne by 6 per cent to $626,869, and Canberra by 2 per cent over the financial year and hit $630,888 in December 2026.

Rents are expected to increase next year, according to the report, with Sydney house rents projected to rise by 4 per cent and unit rents by 5 per cent, Melbourne house rents by 2 per cent and unit rents by 3 per cent, and Brisbane house rents by 4 per cent and unit rents by 5 per cent. Adelaide and Perth will see both rents increase by 4 per cent, while Canberra house rents will rise by 3 per cent and unit rents by 4 per cent.