PREDICTION TWO: Price growth to continue but moderate by mid-year The Australian housing market moves into 2026 with far more momentum than most expected a year ago, but also with a degree of uncertainty. Double-digit annual growth has returned ahead of schedule, driven by a persistent imbalance between supply and demand and renewed confidence in the larger capitals. Whether this pace can be sustained into next year will depend heavily on the interest rate path and the speed at which construction costs continue to moderate. Through late 2025, the recovery broadened well beyond the early outperformers, highlighting a national market that is increasingly synchronised, even if individual city drivers differ. Premium markets have also re-entered the picture. Sydney’s high-end suburbs are again showing meaningful price gains as prestige buyers return following earlier rate cuts. The biggest wildcard remains the timing of rate cuts. Labour market strength has complicated the outlook, delaying expectations of the first move even as other parts of the economy soften. While construction activity is cooling and cost pressures are easing, inflation remains too high for early action. Taken together, the fundamentals still point to another year of solid, but more moderate growth. Unless rate cuts arrive earlier than expected, the market is likely to move beyond the double-digit phase during 2026 and settle into a steadier, more sustainable pace. House and unit price trends Median price as of October 2025 - Australia
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