2026 Property Price Forecast Exposed: Domain & Sqm Research Reports

If you're looking at buying property or you have an investment portfolio, then you definitely need to watch this because I'm gonna break down two really important reports that are gonna change the way you think about real estate investing in 2026. If you're interested in what my thoughts are, definitely keep watching. Hey guys, my name's Ravi and welcome back to Personal Finance with Ravi Sharma. If you're new here, smash that subscribe button because I talk about real estate, personal development and all things financial freedom. Now, Domain has come out with a report of their forecast for 2026. Now, who doesn't love a good prediction? Obviously, we're gonna go through the report. I'm also gonna go through some of the predictions that Louis Christopher and the SQM research team have come out with. And trust me, you're gonna wanna stay for that. At the end of the video, I'm gonna share with you exactly what my thoughts are around 2026 and where prices will be. So with that, let's jump in. All right, the forecast report 2026, price and rents record highs and the first home buyer boom. Australia's housing market is entering a new phase defined by lower interest rates, increased policy support and a gradual rise in household incomes. After years of affordability strain and tight supply, 2026 is expected to bring a more balanced, policy-driven cycle supported by renewed confidence and easing financial conditions. I'm not so sure about the affordability strain now being eased. I think it's gonna get a lot worse, but they're probably referring to the interest rate cuts here. Home prices are forecasted to reach record highs across all capital cities by the end of 2026. With Melbourne and Canberra expected to complete their price recovery, growth will unfold in two clear phases. There's the first phase, which is the momentum building, which is the expanded first home guarantee scheme, tailwind from lower interest rates and rising income will fuel the stronger demand and faster price gains. And then in phase two, we're gonna have growth which moderates. According to this, affordability pressures start to cap gains, particularly in cities that have surged in recent years. Now generally what you'll see is that you'll see the higher markets actually push first and then you see what the ripple effect is and that goes out into the smaller regional centers. Now, this could be playing out really different in 2026, mainly because the 5% deposit scheme that the government has come out with actually targets affordable properties. So what you're seeing is massive demand at the lower price points and not so much action in the higher price points. But what I believe is gonna happen is that you will see a lot more demand pushing into those lower affordable properties, which therefore means for some people that could buy for say 1.6 and now having to spend 1.45 or 1.5, they're gonna go, if I can afford an extra 100K, that house is significantly better than the one I'm buying because there's been all this pressure and the market will then start trickling up the other way around. House price growth in 2026 is forecast to be strongest in Sydney and Melbourne, consistent with their faster response in interest rate changes. Brisbane and Perth are expected to lead unit price growth, albeit at a slower pace than in previous years as affordability becomes tighter. Across the capitals, growth in unit prices is expected to outpace house prices in Brisbane, Adelaide and Perth as more buyers shift to affordable homes. I definitely don't agree with that, but let's go through and see what they're forecasting. So combined capitals, they believe 6% growth in houses and 5% in apartments. You've got Brisbane up the top at 5% and 7%. You've got Sydney at 7% and 4%. Canberra at 5% and 3%. Melbourne at 6% and 4%. Adelaide at 4% and 5%. And then Perth at 5% and 6%. Now I can tell you hand on heart right now, these are very, very conservative based on all the modeling we do at Search Property. If you guys need help with buying a property, strategizing the right way, there's gonna be a link in the description box below for you so you can book in a free call. But based on everything we're looking at, I think it's gonna be significantly higher. A lot of the predictions or forecasts that we've actually modeled out is very similar to what comes out a couple of months later from SQM Research, which is why I'm gonna go into that in a little bit as well. Now, what we see here is effectively the property clock. At 12, you've got the height of the market. At six, you've got the bottom of the market. And from 12 to three is usually the worst time to be in the market because the market is actually declining. And what you can see is by no surprise, everything is here on the left-hand side and is essentially saying that we're between accelerating price rises and slowing price rises. Now, they've also broken it down into financial year 26. So that's already kicked off from the 1st of July, 2025 and all the way to June 30th. And with those numbers, you can see it's a lot higher, which is averaging out for houses at 9% and then for units at 8%. Now, equally, we need to look at rents as well, especially if you are going out into the market as an investor, you wanna know, is your property gonna give you the cashflow you need to be able to hold onto this? So we've got units and houses. And what we see is very mediocre growth in terms of rent when it comes to 2025. And then in 2026, it's looking like much the same. However, with units, what's being forecasted is a lot higher in terms of how much rents will increase by. And that's just this whole case of affordability. If you think about it like a pyramid, at the top, you've got the luxury market. There's not as many buyers, not as much activity either. Then at the bottom of the market, you have all the affordable properties. Now, this could range from not just houses, but townhouses and apartments. And that is where a lot of the attention goes when the markets go and extend out and there's been a lot of price growth. This is why I coined this idea that you could build a recession-proof portfolio by going in and buying affordable properties. So if you go into the market and say, okay, the median value in this suburb is say $700,000, I will try and stick to that or below that. But if I'm going into a suburb for $700,000 and I'm buying something for 1.1 million, you've got to understand that the majority of the market cannot afford that. And so when we do have interest rates increase or we do have some volatility in the market, those are the ones that most likely pull back to the median. Whereas what you see is at the bottom half of it gets pulled up to the median as well, which is how you protect your downside as well. And it's why when you actually look at the data, you'll see that capital cities are more volatile purely because they're so sensitive to interest rates. If you have a $3 million mortgage, then of course a 1% decrease or an increase is definitely gonna make a huge dent. However, that same 1% on a $400,000 home is not gonna be as significant. That's why you see when the market does correct, the regional markets don't correct as much as the capital cities do. Now I've covered off in detail this 5% deposit scheme and how it's gonna cook the market. You've got the removal of income caps. It was previously 125K for individuals and 200K for joint applicants, that's gone. Then removing the limit on the annual amount. So previously it was 50,000 allocation. Now there is none of that. So if there's 100,000, 200,000, they'll all be applicable for the spots. And then there's been a lift in the property price caps and they're actually quite significant. So if you look at Sydney, previously it was 900,000, now it's 1.5 million. Melbourne, 800 to 950. Brisbane has gone from 700 to a million. Adelaide has gone from 600 to 900. Perth has gone from 600 to 850. And Canberra has gone from 750 to a million bucks. The same things happen regionally as well. And you've seen those increases across the board. Now, the idea was that we were gonna see interest rate cuts quite aggressively and we haven't really seen that. We've seen three rate cuts this year and then it's been paused. And what we can see here is that most people, including myself, thought that interest rates will be much lower now, but they actually aren't. And the expectation now is that because inflation is a little bit stickier, that they're thinking, okay, well, we need to keep an eye on unemployment, which technically is rising slightly, but then just playing this balancing act between managing what unemployment looks like, but also managing inflation. As of right now, there are still expected to be a couple more rate cuts in 2026, and it's probably not as aggressive. Now, I did say a few months ago that, hey, there's two scenarios that could play out. One, where they go and cut the rates really quickly and aggressively. And while that may seem like a really good option for you and I, because, hey, I've got a mortgage and I can pay a lot less, what you find yourself in is an economy that is very volatile. So it'll go through smaller cycles, which means interest rates go down really quickly, but they also go up really quickly. And as a result, you also see price fluctuations a lot. However, what you want is a market that's gonna be smoother. So the fact that we're slowing down in terms of how many interest rate cuts we actually have is actually a really, really good thing. It's a sign that the economy and the market can be a lot healthier than normal. It's like when you actually fall sick and you have a flu or a cold and you go, okay, I can either go in and get antibiotics and get fixed straight away. You don't really build your own immune system. And so what you want is there to be a little suffering. And what happens is your immune system starts catching up and you get to the point where you actually can just recover on your own. Interest rates are like that. So if interest rates come in and they go, okay, well, that's the only way to stimulate the market. We're gonna come in, drop interest rates. It's like, okay, but now I'm reliant on the monetary policy. There is an argument that we're already screwed because of the way the monetary policy actually works, but that's a whole nother video. Now, this graph here was particularly surprising, which is after years of lagging, incomes are now outpacing inflation. Now, a lot of you guys might be watching and saying, well, I don't think I feel any richer. And to be honest, I see a lot of people around me and they're saying the exact same thing. So if you look at this, it's showing that the real household disposable income per person is looking quite healthy, especially with inflation having come down from about 8% all the way down to about 3%. Now, SQM Research have been around in the game for a really long time. I've spoken to Louis Christophe, I did a podcast with him, and he seems like a really nice dude, but he's also very smart. And what they come out with every year is a boom and bust report. In that, they go through particular scenarios and how that's gonna affect property prices. They've been pretty much on the mark the last couple of times. I like the fact that they're actually real in terms of people out there looking at data and real data versus some of the reports that have been coming out over the last couple of years, which was everything's screwed. And my most bullish case is that everything's also gonna crash. I don't really like hearing those people because bears might enjoy the short term, but bulls actually make money. So that's what we're here for. We wanna make money. And if you do, smash that like button. It's gonna spread this out to more people that are too negative and they need to get a little positive. So what we have here is scenario one, which is the base case. Scenario two is sticky inflation. Scenario three is global slowdown spillover. And scenario four is the economic rebound. So what I wanna do is I wanna draw your attention to the first one and the last one. Reason being is those are the two most likely outcomes in my opinion. So what we have here is in the base case, we have 25 to 50 basis point cuts from mid-2026. Seems reasonable. We have steady but sluggish economy. Very reasonable. And inflation is between 2.5 and 2.7% as a yearly average. Nothing crazy here. I think this is a very fair base case. Now, as a result of that, SQM research think that the weighted capital average will go up by between 6% and 10%. And you've probably already read this ahead of time, but Perth goes up by 12 to 16%, similar to what Darwin's gonna be at 12 to 16%. Now you can decide which area is better. There's one that has a diversified economy and one that's being absolutely pumped by buyers agents. And I'm telling you now, we have not bought a single property in Northern Territory and I have no plans to either. Brisbane at 10 to 15%, Melbourne, 4 to 7%, Sydney at 3 to 6%, Adelaide at 10 to 14%, Hobart, 4 to 7%, and Canberra at 3 to 6%. This goes against what Domain's actually saying, who are saying that Sydney and Melbourne are going to be the most powerful because interest rates are cutting. But in reality, they've said affordability is the concern. So if affordability is the concern, the smaller capital cities and regional hubs will be where all the activity actually happens, which is more in line with what SQM research is suggesting. Then you have the most bullish case, which is the economic rebound. Rate cuts throughout the year of 0.5 to 0.75. So that's about two to three rate cuts. Again, seems fair. Lower inflation at 1.9 to 2.1% and falling unemployment back to low 4%. Now, some of this is counterintuitive. If inflation is going down, that means, okay, yes, tick, the interest rates should cut. But if unemployment is going down, then we have a situation where the RBA is going, well, actually the economy is quite healthy. I don't know if we should be actually cutting. But if this scenario is to play out, this is an absolute full send mode and would line up better with the 18.6 year cycle, which is 2026. Bleeding into 2027 should be the top of the market where we have the most amount of growth. Now, I believe it's going to run for a lot longer than most people think, and people are going to get sidelined by either selling too early or not getting into the market because some sort of crash is actually coming. I think a lot of those people are going to get caught offside and wrong. Now, in this case, it says Perth will grow between 17 and 21%. Brisbane, 13 to 18%. Darwin, 14 to 18%. Melbourne and Sydney will grow at seven to 11%. Adelaide at 14 to 18%. Hobart, six to 10%. And Canberra at five to 9%, giving us the weighted capital average of 10 to 14%. Now, let's wrap this up with exactly what my thoughts are. I believe that a lot of people are thinking there's a crash coming, so they're not going to buy. I also think that a lot of people believe that everyone can't afford to buy property because of their immediate circle. It's sad to say, but the reality is your circle does not make up the entire market. We are hitting all time highs with how many people want to use our services, and we're not alone. We also know that the amount of demand in the market has shot through the roof, while confidence is still low. And that tells me that the people that can buy are going aggressively and buying. Those that are stuck in the middle going, I don't know, but I can buy. Those are the ones that lose out the most. And then there's the others that just cannot simply buy. Unfortunately, if you can't buy, you're in this position where you're saying, unfortunately, I'm just going to have to wait on the sidelines. The hardest place to be is when you can buy, but you decide not to. That's where people get caught out because the ones that actually can't buy, as soon as they can, they go out and execute. The ones that know this game and have been in the game for a while are going in and accumulating as much wealth. I've said this before as well, by 2030, it will be a privilege to buy a house. And I don't make up the rules. That's just how it is. And unfortunately, it's going to be similar to how people say, I would really like a house in the Eastern suburbs, but it's out of reach. So people don't even think about that. They say, if I want to move to the Eastern suburbs, I'd like to get an apartment because that's what I can afford. And I think that's going to happen with houses across all of Australia at some point. And the only time this will change is if you have significant increases in supply, you have changes at the bank with how they lend money, and you have immigration actually fall through the floor. I'm not sure how keen the government is in implementing all three and implementing them all at the same time. I want to know what your thoughts are in the comments down below. Is this too bullish? What do you think is going to play out? And I'd love to have a discussion as well. I hope you guys have enjoyed this video. If you have, definitely smash that subscribe button and you guys will enjoy this video next. So definitely go ahead and click on it.