From surge to steady: Australia’s property market to stabilise in 2026

According to LJ Hooker head of research and business intelligence, Mathew Tiller, the 2025 market has largely been driven by the Reserve Bank of Australia’s (RBA’s) decision.

He said that when the RBA began its series of interest rate cuts, buyers saw an opportunity to enter the market, driving up property prices.

While 2025 was a year of interest rate cuts, major banks have predicted that rates will either hold or hike, keeping the market steady for 2026.

“Interest rates are expected to stay on hold for most of 2026, so the cash rate becomes the new normal rather than a major driver,” Tiller said.

“Against that backdrop, we anticipate that listings, supply and demand will push market performance.”

“The number of buyers looking at property should remain solid, supported by population growth and improving confidence.”

Smaller markets punching above their weight

Across the country, LJ Hooker said that small capital cities, such as Perth, Adelaide, and Brisbane, were expected to continue outperforming the major hubs of Melbourne and Sydney.

The network identified key suburbs likely to attract substantial interest in 2026, including Ripley, Griffin, and Petrie in Queensland; Munno Para West, Port Adelaide in South Australia; and Alkimos and Ellenbrook in Western Australia.

Tiller said that liveability surrounded by amenities in suburbs such as Ripley was leading the way in Brisbane.

“As Brisbane’s middle rung prices push people out, more buyers are looking west,” Tiller said

“Population growth and staged land release are helping to support ongoing activity through 2026.”

A similar trend has been emerging in Western Australia (WA) and South Australia (SA), according to Tiller, where increased connectivity to CBDs is driving buyer demand in the area.

Sellers to get active

As sellers will not be anticipating any further rate cuts, Tiller said more home owners were expected to test the market in 2026, bringing additional stock to meet demand.

“Extra listings should take some heat out of price growth, but with the underlying housing supply still tight, it is likely to remain a seller-friendly market in most areas,” he said.

No relief for renters

While stock will be coming on for buyers, Tiller said that a lack of new developments in the pipeline will likely leave renters feeling the pinch of limited supply.

“Rents are expected to stay high in 2026 because the market is still not approving and building enough homes, especially medium and high-density projects,” Tiller said.

He added that the rental shortage would continue to keep vacancy rates low and support rent growth, ensuring investors remain interested, particularly in suburbs such as Parap (Northern Territory), Bonython (WA and ACT), and Port Adelaide (SA).

“Parap is one of Darwin’s lifestyle suburbs, known for cafes, the weekend markets and easy access to the waterfront,” Tiller said.

“Rental demand in this pocket has remained consistently tight.”

Savings over location

Additionally, Tiller said that in 2026, buyers will become more creative and seek alternative ways to achieve ownership as affordability pressures mount.

“Affordability is pushing more buyers to chase value rather than focus on a single postcode, shifting demand towards more affordable cities, outer suburbs and key regional hubs.”

“This is likely to see townhouses, dual occupancy and mid-rise apartments increase in popularity.”

Up-to-date technology to dictate demand

While some buyers prefer the sturdiness of red bricks, Tiller said younger buyers have begun to view older properties as outdated, favouring dwellings that prioritise environmental sustainability.

“As more households buy electric vehicles and pay closer attention to power bills, buyers will be looking for homes with solar, batteries, charging stations and modern switchboards.”

Tiller said that a steady market in 2026 will keep investors active, while encouraging more first-home buyers and upgraders to move when the opportunity arises.

“It is shaping up as a year of adjustment rather than a boom or bust, with the market balancing out slowly rather than sharply.”

“This is good news for sellers and buyers; there will be both motivation and reassurance to make a move in the coming year, and this should keep increasing turnover,” Tiller concluded.