Australia’s housing market is heading into 2026 with clear signs of further price growth, according to SQM Research’s new Housing Boom and Bust Report. The report forecasts national dwelling prices to rise between 6 and 10 per cent next year, supported by steady population growth, easing inflation, and the expectation of interest-rate cuts from the middle of the year.
The gains will not be evenly spread, though every capital city is expected to record some level of growth. Perth, Darwin, Brisbane, and Adelaide are once again tipped to be the strongest markets, driven by tight rental conditions, strong migration, and relative affordability for buyers comparing options across the capitals.
Under SQM’s base-case scenario, national capital city prices are projected to rise between 6 and 10 per cent. Sydney is forecast to grow between 3 and 6 per cent, while Melbourne is expected to increase between 4 and 7 per cent. Hobart sits in the same range as Melbourne, with Canberra tracking similar to Sydney.
SQM’s base-case outlook is built on several assumptions: interest rates falling by 25 to 50 basis points from mid-2026, inflation easing to between 2.5 and 2.7 per cent, a cooling jobs market, and population growth moderating to around 390,000 people. That level of population growth is expected to require demand for about 150,000 dwellings, while completions are projected to reach 180,000, creating a small surplus.
Even with slightly sluggish economic conditions, the report suggests price momentum from late 2025 will carry through to next year.
If interest-rate cuts come later than expected, the pace of growth would cool but remain positive. Under this second scenario, national prices would rise between 4 and 8 per cent. SQM notes that demand has already been lifted by the First Home Buyer Deposit Scheme and the 2025 rate cuts, offering a buffer regardless of the precise timing of the next adjustment by the Reserve Bank.
SQM also models a global slowdown spilling into Australia. Even with unemployment rising to around 5.5 per cent, the report still expects national dwelling prices to rise, pointing to the strength of underlying demand and structural pressures in supply.
The most optimistic scenario paints a brighter picture again. If inflation falls faster, unemployment drops into the low 4 per cent range, and rate cuts total between 0.50 and 0.75 per cent across the year, prices could rise between 10 and 14 per cent nationally. Perth, Brisbane, Adelaide, and Darwin would see the sharpest increases, with markets such as the Sunshine Coast, Gold Coast, and Mackay also forecast to lift strongly.
Across all four scenarios, SQM forecasts no nationwide price declines in 2026. It suggests that stabilising rates, tight supply, and a still-growing population continue to support dwelling values even as the broader economy slows.
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