Australia’s Property Market in FY26: What the Domain Forecast Really Tells Us

Thinking about buying, selling, or investing in property this year?
Then you need to know what’s ahead for the market, and Domain’s latest FY26 Price Forecast Report has just given us a roadmap.

At Property Dollar, we’ve reviewed the full report and pulled out what matters: the trends, the numbers, and how they impact you. Whether you’re a first-home buyer, seasoned investor, or just watching from the sidelines, this is your go-to breakdown, plus tools to help you make smarter decisions.

Let’s dive in.

The Big Picture: Yes, Property Prices Are Still Rising

According to Domain’s 2025–26 forecast, home prices across Australia’s capital cities are expected to keep climbing—but not at the crazy pace we saw post-COVID.

Here’s what’s driving the next leg of growth:

• Interest rates are easing: The RBA has already cut 50 basis points in 2025. Markets expect another 80bps by mid-2026.
• Housing supply is still too low: Demand continues to outstrip new housing completions.
• Government incentives are ramping up: First-home buyer schemes and shared equity programs are expanding.
• Wages are rising while inflation cools: This boosts borrowing capacity and serviceability.

Put simply: we’re heading into a steady growth phase, not a boom or bust.

“The national picture remains one of continued price growth, shaped by favourable macroeconomic conditions, structural undersupply, and targeted policy support.” – Domain FY26 Forecast Report

Capital City Forecasts: Sydney and Melbourne Take the Lead

Sydney: Back in Growth Mode

• House price forecast: +7%
• Expected median: $1.83 million
• Unit price forecast: +6% (to $889K)

Sydney leads the growth charts. With high-income households and strong demand, lower interest rates have a big impact here. The report also points out Sydney’s supply shortages and wage growth as key contributors.

Melbourne: The Recovery Play

• House price forecast: +6%
• Expected median: $1.11 million
• Unit price forecast: +5% (still 3% below 2021 peak)

Melbourne is finally shaking off the 2022–24 downturn. The price gap with Sydney is massive—Sydney homes are now 63% more expensive, making Melbourne look like a bargain.

Brisbane: Holding Steady

• House price forecast: +5%
• Unit price forecast: +5%
  Affordability pressures are rising in Brisbane, especially post-Olympics hype. Still, infrastructure investment and demand for cheaper units keep growth on track.

Perth & Adelaide: Slowing But Solid

• Perth: +5% houses, +6% units
• Adelaide: +4% houses, +3% units

Both cities had standout runs since 2020. Now, with affordability tightening and population growth slowing, the pace is normalizing—but price growth remains positive.

Canberra: Early Recovery Signs

• House price forecast: +4%
• Unit price forecast: +3%
  Canberra is still below peak, but improving affordability and economic stability are drawing interest back in.

What This Means for Buyers and Investors

For First-Home Buyers:

• Timing matters. With prices expected to rise steadily, entering the market sooner could lock in value before the next leg of growth.
• Units are more attractive than ever, especially in major cities where detached houses are out of reach.
• Incentives are improving: Shared equity schemes and LMI waivers are designed to boost your borrowing power.

Use the Property Dollar Borrowing Capacity Calculator to see how far your budget goes in each city.

For Investors:

• Rental yields remain strong, especially in Perth and Brisbane.
• Sydney and Melbourne offer recovery upside—they’ve lagged since COVID, but Domain expects them to lead the next phase.
• The equity gap is widening: Detached homes are outperforming units, especially where land scarcity is a factor.

Are There Any Risks?

Yes, but they’re largely balanced. According to Domain:

Downside risks:

• Affordability constraints (repayments now exceed 50–55% of income in many cities)
• Slowing population growth
• Global economic uncertainty affecting consumer confidence

Upside risks:

• Faster-than-expected rate cuts
• Continued policy support
• Supply failing to keep up

That’s why data-backed decision-making is more important than ever.

Our Take: Be Strategic, Not Emotional

Domain’s FY26 report paints a clear picture:

“This is not a frenzy. It’s a reshuffling.”

Sydney and Melbourne are reclaiming momentum. Investors chasing affordability over fundamentals may soon find better opportunities elsewhere. And first-home buyers have a small but real window of opportunity before further price growth locks them out again.

So what should you do?

• If you’re a buyer: Focus on liveability, infrastructure access, and affordability within your serviceability range.
• If you’re an investor: Think long-term yield + capital growth. Diversify beyond the hot spots.
• If you’re on the sidelines: Don’t just wait for prices to drop. Build your financial profile and explore emerging pockets now.

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Final Word

FY26 is shaping up to be a strategic year, not a speculative one.
Prices are rising. But this time, it’s slower, more measured, and driven by economic fundamentals. So if you’re planning to make a move, buy, sell, invest, or restructure—
Now is the time to get informed, not overwhelmed.