Australia’s median house price set to surpass historic $1m barrier in 2026
The Australian property market will continue its record-breaking run in 2026 and the combination of capital cities is set to surpass a historic milestone.
Forecast data published by Proptrack shows that the average capital city house price will increase between 6 percent and 8 percent in the new year.
If this prediction is correct, the capital cities combined will exceed the historical average price of $1 million for the first time.
As of November 2025, the average combined capital city home cost $979,000.
REA Group senior economist Angus Moore says momentum in the housing market is starting to slow despite reaching a record high.
“The tight supply environment that has supported price growth this year continues, but the decline in affordability and the prolonged pause in interest rates will slow the pace of growth,” he said.
Mr Moore said higher house prices would mean the current rise would remain well below the 20 to 30 per cent annual rise seen in previous market cycles.
While the limited supply of new homes and falling interest rates are causing house prices to rise, more Australians are still trying to enter the market.
“Demand will be supported by population inflow, income growth, investor activity and a recovery in borrowing capacity following a series of interest rate cuts in 2025,” he said.
Perth and Brisbane are forecast to remain the strongest performing markets, but even these markets will calm down from recent highs.
Proptrack says Perth has benefited from an influx of population and a tight rental market, while Brisbane will still outperform despite having recorded “exceptional growth” over the past few years.
Sydney is expected to increase between 5 per cent and 7 per cent; There are affordability restrictions that mean the bulk of purchasing activity will take place in the outer and middle ring suburbs.
Melbourne is expected to recover from its recent underperformance and also add between 5 per cent and 7 per cent to property values.
Adelaide’s significant price growth has made affordability very difficult, and as growth slows, momentum will naturally wane.
Hobart is entering a consolidation phase where prices have yet to reach their 2022 peak. Affordability in all these markets remains strained relative to local incomes.
