By Graeme Salt
Home prices will finish 2026 largely flat across the combined capitals, as higher interest rates and strained affordability see soft to falling prices through the back half of 2026, before a turning point and return to growth late in the year and into 2027.
But the result is not a uniform slowdown. It is a divergence – between cities with different affordability profiles, investor exposures and supply dynamics, and between houses and units within those cities
Nationally, home prices are expected to grow 5.5 per cent in 2027, slightly below the typical growth rate of around 7 per cent, reflecting affordability challenges and diminished investor demand.
The changes in the Federal Budget, and the consequent reduction in investor demand, will weigh on growth in 2026 and 2027. Estimates suggest that, over the long-run, home prices will be a few percent lower than otherwise. That translates into slowing home price growth in 2026 and 2027 by a couple of percentage points.
This week’s inflation numbers show no immediate interest rate change. But some forecasters believe there may still be one further rise this year.
- Sydney and Melbourne are expected to lead the downturn, reflecting their greater sensitivity to interest rates, affordability pressures and investor policy changes
- Brisbane, Adelaide and Perth are forecast to continue growing, supported by population growth, tight rental markets and ongoing supply shortages.
- Canberra is also expected to have softer conditions, with modest price movements expected across both houses and units.
So, what does this mean for you?
It is certainly a buyers’ market. And the temptation is to believe the cards will be stacked even more in buyers’ favour later in the year.
But, nobody can pick the bottom of the market with precision.
And things can change rapidly. This week:
- Inflation figures came in way better than economists feared
- A change in government in Melbourne, pointed to a more investment-friendly environment
The best time to buy could be today!
Graeme Salt is an award-winning mortgage broker. For a no-obligations consultation on your home loan needs, please contact him on 02 9922 5055.
