Property prices tipped to hit record highs in 2025-26, bringing pain for buyers and a boom for sellers
Australian property prices are set to jump even higher in the coming year, which is more bad news for first-home hopefuls.
But higher prices will help sellers boost profits from the sale of properties, as they capitalise on the current interest rate-cutting cycle.
Two new reports released today reflect the interests of two very different groups of people in Australia.
According to Domain’s latest Price Forecast Report, Sydney and Melbourne prices will lead the charge in the next 12 months.
The median house price in Sydney is forecast to jump by another 7 per cent in 2025-26, to a staggering $1.83 million by June 2026.
It means the typical house price in Sydney will rise by $112,000, which is more than the average full-time worker earns before tax ($103,000).
The median house price in Melbourne is tipped to rise by 6 per cent, after two years of downturns, to $1.1 million.
Property prices in Brisbane, Adelaide and Perth, once hotspots for affordability, are showing signs of cooling, but not nearly enough to ease the pressure on first home buyers.
Nicola Powell, Domain’s chief of research and economics, says the forecast price rises will be a “reality check for many people.”
“If you’re trying to break into the property market, the next year could be your toughest challenge yet,” she warned.
“While interest rate cuts and government support may offer some help, they’re also likely to keep prices rising, especially in Sydney and Melbourne, where the market is more sensitive to rate changes.
“Growth will slow compared to past cycles, but affordability is still a major barrier, with housing costs consuming a large portion of household income,” she said.
It will be a similar story for unit price growth.
Domain said affordability constraints and first-home buyer incentives will likely push more buyers toward units, where prices are cheaper than the detached housing market, and unit prices will hit record highs in most capital cities.
It says lower interest rates help to boost property prices because they improve the borrowing power of Australians.
It says the Reserve Bank has already cut the cash rate by 50 basis points this year, and the market is pricing in an additional 80 basis points of cuts by mid-2026.
However, it says strong housing demand could also ease a little over the next 12 months, because population growth is expected to slow down.
The median unit price in Sydney is forecast to jump by 6 per cent in 2025-26 (up $53,000 in 12 months) to $889,000, which will be a record high.
In Brisbane, the median unit price is tipped to jump by 5 per cent (up $31,000) to $701,000, also a record high.
Similarly, Perth will see the median unit price jump 6 per cent (up $33,000) to $552,000, and Adelaide will see the median unit price rise by 3 per cent (up $18,000) to $586,000.
Domain’s report does not include property prices in Hobart.
Cotality’s Pain and Gain report
Meanwhile, Cotality (formerly CoreLogic) has released its latest Pain & Gain report, which views properties from the perspective of people who are interested in making a “profit.”
It analysed 86,000 resales in the March quarter and found 94.9 per cent of property resales “delivered a profit” for the sellers, with a median nominal gain of $305,000.
That was down slightly from $310,000 in the previous quarter, marking the first financial quarter since March 2023 that median nominal gains have fallen.
Cotality’s report says regional hotspots such as Noosa, Busselton, Grant, and the Sunshine Coast delivered some of the biggest profit uplifts in Australia in the March quarter.
In those markets, median resale profits surpassed $400,000 in the quarter, “a staggering increase compared to five years ago.”
It says houses also continued to outperform units nationally in the March quarter, with 97.2 per cent of house resales delivering a profit, compared to 90.1 per cent of unit sales.
“The difference in returns was striking over the March quarter, with the median gain on houses at $355,000, around 73 per cent higher than the $205,000 median gain for units,” the report says.
“Interestingly, despite the wide gap in gains, the median loss was nearly identical. The median loss was $45,000 for houses and $44,000 for units.”
