Australian property prices are anticipated to reach record highs in 2025-26, creating challenges for first-home buyers while benefiting sellers. Domain’s forecast predicts significant price surges, particularly in Sydney and Melbourne, with the median house price in Sydney projected to rise by 7% to $1.83 million by June 2026.
Despite previous downturns, Melbourne is expected to see a 6% increase in median house prices, reaching $1.1 million. However, regions like Brisbane, Adelaide, and Perth, which were once considered affordable, are showing signs of cooling, offering little relief to first-time buyers.
Nicola Powell, Domain’s chief of research and economics, warns that the upcoming year may pose the toughest challenge for those aspiring to enter the property market due to affordability issues. While interest rate cuts and government support might provide some assistance, they are also likely to fuel further price hikes.
Domain predicts that unit prices will also soar to record levels in most capital cities as affordability constraints push buyers towards units. Lower interest rates are expected to boost property prices by enhancing borrowing capabilities, with further rate cuts anticipated in the near future.
Meanwhile, Cotality’s Pain and Gain report highlights that 94.9% of property resales in the March quarter yielded profits for sellers, with a median nominal gain of $305,000. Although this figure slightly decreased from the previous quarter, the market is showing signs of renewed momentum following recent rate cuts.
Eliza Owen, Cotality’s head of research, notes that profitability is expected to rise further as demand increases due to rate reductions. Regional markets like Noosa, Busselton, Grant, and the Sunshine Coast witnessed significant profit increases, with median resale profits exceeding $400,000.
House prices outperformed units nationally, with a higher proportion of house resales delivering profits. The report indicates that despite the substantial difference in gains between houses and units, median losses were relatively similar.
As property prices continue to surge, concerns regarding housing accessibility are growing, even as affordability improves with declining interest rates. The market is witnessing a transition, with profitability projected to strengthen in the coming months as values rise and demand increases.
With the housing market evolving and prices on the rise, the forecast for 2025-26 suggests a challenging landscape for buyers, while sellers stand to benefit from the ongoing property boom.
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