Australian Property Market 2026: 2025 Review & Growth Predictions
The Australian property market delivered strong returns in 2025, with most capital cities achieving double-digit growth despite economic headwinds. In this year-end review, we examine what drove property values higher and what investors can expect in 2026.
Australian Property Market 2025 Wrap-Up: What to Expect in 2026
There was a uniform return to growth for most of the nation’s major markets in 2025, fueled by three RBA rate cuts, an ongoing property supply shortfall, continued migration and a steady jobs market. Rents continued to rise, though more gradually than previous years and vacancy rates remain tight at around the 1.1 per cent mark at a national level.
Investors following the B Invested philosophy will have benefited from growth in capital, as well as return. Conditions are now ideal to harness some equity and grow wealth in what looks to be another promising year in 2026 for those who play their cards right.
2025 Market Performance: Proof in the Numbers
All capital cities except for Hobart surpassed their former value peaks in 2025, and all cities were in growth mode by the end of the year. Nationally, capital city homes grew by about 10% according to data providers PropTrack and Cotality, but individual cities such as Perth, Brisbane and Adelaide outperformed the average by some margin.
This was good news for the B Invested clients who have invested in the Perth market recently and of course the many who have been invested in southeast Queensland for a number of years.
What Drove Growth in 2025?
RBA Rate Cuts and Borrowing Power
When the RBA first cut the cash rate back in February, it signalled the end of a brutal tightening period where rates were hiked 13 times. Buyer sentiment surged after the first rate cut and people were anticipating many more. The subsequent two rate cuts boosted borrowing power, bringing a lot more people back into the market at the affordable end of the scale, and value growth followed.
Later in the year, the bottom end of the market got a further boost when the government brought forward its extension to the home guarantee scheme, allowing first home buyers to purchase with a 5% deposit. This created competition for the investors who were already cashing in.
Housing Supply Shortage
Meanwhile, construction of new housing supply is falling further and further behind where it needs to be. The federal government’s housing accord target of 1.2 million new homes by mid 2029 is already more than 20% behind after the first 18 months. And this looks like slowing further. The only way is up for home prices when there aren’t enough to go round.
Property Market Predictions for 2026
Capital City Growth Forecasts
SQM Research, PropTrack and Cotality are all forecasting growth next year for capitals, by an average of 6-10%. The outperformers of the last year, Perth, Adelaide and Brisbane, are tipped for the strongest growth once again, while Darwin has also emerged as a market to watch out for. There is some value in Victoria for 2026 too, with markets tipped to grow in equity and plenty still available for below market value if you know where to look.
Units vs Houses in 2026
Meanwhile, KPMG predicts unit prices will outpace houses in 2026; which would make sense after houses pulled so much further ahead in the Covid lockdown years. These smaller dwellings are likely to benefit from affordability constraints in the year ahead. Their lower entry price, plus high rental demand, will help boost yields.
Want ongoing market insights? Explore our Info Hub for regular updates on Australian property investment trends.
Managing Inflation and Interest Rate Risk
The last couple of months of 2025 have shown us that inflation is still not under control. Indeed, it surged for consecutive months to sit well outside the RBA’s target band of 2-3%. Many economists are now predicting rate rises in 2026, which would add to borrowing costs.
The flow-on effect would be a diminishing of borrowing power and affordability, which could affect value growth across markets. If this happens, cashflow is king for investors. The ability to remain positively geared will be key. The ongoing tightness of rental vacancy rates and plenty of demand from tenants should provide a buffer on returns.
Key Takeaways for Property Investors in 2026
Despite potential interest rate volatility, the fundamentals remain strong for Australian property investors. The key strategies for 2026 include:
- Focus on high-growth markets like Perth, Brisbane, and Adelaide
- Prioritize cashflow-positive properties to weather potential rate increases
- Consider emerging opportunities in Darwin and selective Victorian markets
- Target well-located units with strong rental demand for higher yields
Ready to Invest in 2026?
With strong growth predicted across multiple capital cities and emerging markets, 2026 presents significant opportunities for strategic property investors.
Whether you’re looking to:
The B.Invested team is here to help you navigate the market and secure high-performing investment properties.
