Revealed: The cities where house prices will soar by 2026

Australia’s property market is gearing up for a dramatic price surge, with the cost of homes tipped to rise by as much as $154,000 in some cities over the next two years.

From Sydney’s soaring price tags to Perth’s percentage growth boom, the nation’s housing market is entering a new era of competition – and the stakes have never been higher.

Fresh forecasts from Westpac and analysis by Canstar reveal that no matter where you live, the cost of buying a home is set to climb.

For homeowners, it’s a windfall that could see their equity skyrocket.

But for buyers, the challenge of saving for a deposit and securing a loan is about to get even tougher.

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Sydney is expected to lead the charge in dollar terms, with its median house price forecast to jump by $154,000 by the end of 2026, reaching a staggering $1,675,827.

Melbourne, meanwhile, is on track to break the million-dollar barrier, with a predicted rise of over $100,000 pushing its median house price to $1,059,810 by the end of next year.

The national picture: Which cities will shine?

While Sydney and Melbourne dominate in sheer dollar growth, other cities are set to steal the spotlight in percentage terms.

Perth is forecast to see an 8 per cent rise in dwelling prices this year, while Brisbane is expected to post a 7.4 per cent gain by the end of 2025, according to ANZ.

By 2026, Melbourne is shaping up as the comeback city, with Westpac predicting double-digit growth.

Sally Tindall, Canstar’s data insights director, says the rising prices will have mixed consequences.

“For those already in the market, it’s great news for their equity. But for buyers, the deposit hurdle is getting higher, and clearing banks’ serviceability tests will remain a challenge,” she explains.

“Melbourne’s median house price is tipped to crack the million-dollar mark. For many first home buyers, that psychological barrier will feel like the goalposts keep moving further away.

“This year, Brisbane and Perth are expected to finish as the standouts, while Melbourne is shaping up as the comeback city in 2026, with double-digit growth on the cards, according to Westpac.

“Even with interest rates heading south, there’s no relief for house hunters if prices keep climbing at this pace. The extra borrowing power from lower rates risks being swallowed whole by rising price tags.”

The risks of a borrowing boom

With interest rates trending downward, buyers may feel emboldened to borrow more.

But experts warn this could leave households dangerously exposed.
“The danger is Australians will borrow to the limit, banking on prices continuing to climb,” Tindall explains.
“If circumstances change – whether it’s interest rates, job security, or the economy – it could leave some households in financial distress.

“The more households borrow, the more vulnerable they become to rate rises or shocks to employment.”

As the spring home-buying season heats up, the property market is at a crossroads.

Will buyers take the plunge, or will affordability concerns keep them on the sidelines?

One thing is certain: the next two years will reshape Australia’s housing market, and every city has a role to play in the unfolding story.

The post Revealed: The cities where house prices will soar by 2026 appeared first on realestate.com.au.