Australia\u2019s housing market is expected to lose momentum over the next two years, with higher interest rates and subdued consumer confidence weighing on buyer demand.<\/p>\n
“The uncertain backdrop and higher rates are likely to soften Australia\u2019s housing market in 2026, so ANZ Research now expects capital city housing prices to lift 2.8% (previously 4.8%).”<\/p>\n
Capital city prices are forecast to grow 2.8% in 2026 and 2.1% in 2027, signalling a clear easing in price growth as the property market softens.<\/p>\n
ANZ Research expects the slowdown to become more pronounced in Sydney and Melbourne, which are forecast to underperform in 2026. Softer conditions are then expected to broaden in 2027, with Adelaide,\u00a0Brisbane\u00a0and Perth likely to lose momentum following an extended period of\u00a0strong growth.<\/p>\n
Since the escalation of the Middle East conflict in late February,\u00a0ANZ Research has\u00a0added another\u00a025bp hike to\u00a0its\u00a0RBA profile and now expect the cash rate to peak at 4.35% in May.<\/p>\n
This\u00a0would fully reverse the 75bp of cuts seen in 2025 and would leave rates in what\u00a0ANZ Research\u00a0views\u00a0as\u00a0restrictive territory. Confidence has fallen sharply in recent weeks, with ANZ-Roy Morgan\u00a0Australian Consumer Confidence near a record low.<\/p>\n
The uncertain backdrop and higher rates are likely to soften Australia\u2019s housing market in 2026, so\u00a0ANZ Research\u00a0now expects\u00a0capital city housing prices to lift 2.8% (previously 4.8%) (Figure 1). <\/p>\n
Sydney and Melbourne housing prices are below October 2025 levels, and properties in the top quartile of these markets\u00a0have\u00a0declined for five consecutive months. These two cities tend to be more rates-sensitive (Figure 4).\u00a0ANZ Research\u00a0expects\u00a0to see the sharpest slowdown in\u00a0prices in Sydney and Melbourne with small falls in housing prices in 2026. <\/p>\n
It also expects\u00a0Brisbane, Perth,\u00a0Adelaide\u00a0and Darwin to slow, but this is likely to be more pronounced in late 2026 and early 2027. Listings are currently\u00a0very low\u00a0in these markets (Figure 3), and price growth has\u00a0remained\u00a0robust in early 2026. As the year progresses, higher rates, slowing activity and affordability constraints are likely to slow price growth. <\/p>\n
ANZ Research\u00a0expects\u00a0Adelaide,\u00a0Brisbane\u00a0and Perth to underperform in 2027, with\u00a0widespread falls in housing prices unlikely given the structural tightness of the\u00a0market. Higher interest rates and building costs are likely to negatively\u00a0impact\u00a0supply, while\u00a0population growth is expected to remain solid.<\/p>\n
\u00a0Madeline Dunk and Adam Boyton, Economist and Head of Australian Economics at ANZ.<\/p>\n
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