According to Cotality’s latest Decoding 2026 report, an overwhelming 87 per cent of real estate and finance professionals expect dwelling values to increase in the coming year, with nearly half anticipating growth above 5 per cent.
The optimistic outlook follows a strong performance in 2025, when national dwelling values rose by 8.6 per cent, adding approximately $71,400 to the median home value across all capital cities and regional markets.
Cotality Australia Research Director Tim Lawless said that market momentum slowed toward the end of 2025 as affordability pressures intensified and interest rate expectations shifted.
“Housing conditions were strong through most of 2025, which explains the broadly positive sentiment,” Mr Lawless said.
“However, national averages distort the variation of performances and market conditions at a local level, and it’s those differences that are becoming more important as affordability and policy settings diverge.”
Queensland, Western Australia, and South Australia emerged as the markets with the most positive outlook. In Queensland, 89 per cent of respondents expect prices to rise, with more than half anticipating growth exceeding 5 per cent.
Western Australia showed similarly strong expectations with demand evenly distributed across various price points, while South Australia’s positive outlook is attributed to its relative affordability and limited housing supply.
“Strong internal migration, tighter rental markets and a persistent shortage of housing have combined to support all three of these markets,” Mr Lawless said.
“Those fundamentals remain largely intact but it’s not surprising to see Queensland and Western Australia agents optimistic about price growth in 2026 given their respective fundamentals and economic prospects.”
The outlook for New South Wales remains positive but increasingly conditional due to high dwelling values and stretched serviceability, making growth more sensitive to interest rate changes.
Victoria continues to lag behind other states after recording the weakest performance in 2025.
While most respondents still expect price growth, confidence is dampened by higher property taxes, reduced investor participation, and softer population flows.
The expansion of the First Home Guarantee has significantly boosted market activity, with more than 75 per cent of real estate agents reporting increased buyer interest.
Federal Treasury data reveals that over 21,000 first home buyers have accessed the expanded 5 per cent deposit scheme since October.
However, affordability remains a significant constraint, with less than half of Australian suburbs now falling below First Home Guarantee price caps, a sharp decrease from the previous year.
Despite the generally positive outlook, industry confidence is becoming more conditional due to affordability limitations, interest rate uncertainty, and uneven regional dynamics.
“The market is entering 2026 from a position of strength however, there is a cloud of uncertainty around inflation and interest rate settings as well as affordability challenges, all of which are likely to weigh on housing confidence,” Mr Lawless said.
“However, given we aren’t likely to see a material supply response in 2026 either, this should help to offset any downside risk to home values trending substantially lower.”
