Confidence in property is high as price caution rises
Property experts across the country are supporting a lift in house prices this year but they remain wary of the effect of potential interest rate hikes.
A SURVEY of real estate agents and property finance professionals has overwhelmingly supported a rise in house prices across the country this year.
A report titled Decoding 2026, from property data experts Cotality, shows that 87 per cent of respondents back a hike in dwelling prices in 2026.
Only 3.5 per cent said prices will fall.
Almost half of those expecting an increase believe the growth will exceed five per cent.
Cotality’s December Home Value Index showed housing values rose across every capital city and regional market last year, with national dwelling values increasing 8.6 per cent and adding around $71,000 to the median home value.
Tim Lawless, Cotality Australia Research Director, said momentum slowed at the end of 2025 as affordability pressures intensified and interest rate expectations changed.
“Housing conditions were strong through most of 2025, which explains the broadly positive sentiment,” Lawless said.
“However, national averages distort the variation of performances and market conditions at a local level and it’s those differences that are becoming more important as affordability and policy settings diverge.”
Survey respondents earmarked Queensland, Western Australia and South Australia as the most bullish markets entering 2026.
In Queensland, 89 per cent of those surveyed expected prices to rise, with more than half anticipating growth above five per cent.
Western Australia recorded similarly strong expectations, with evenly spread demand across various price points that’s helped to support steadier growth.
The bullish outlook for South Australia is due to its relative affordability and limited supply.
“Strong internal migration, tighter rental markets and a persistent shortage of housing have combined to support all three of these markets,” Lawless said.
“Those points remain largely intact but it’s not surprising to see Queensland and Western Australian agents optimistic about price growth in 2026 given their respective fundamentals and economic prospects.”
Sentiment in NSW remains positive, though increasingly conditional due to high dwelling values and stretched serviceability, which results in more rate-sensitive growth expectations.
Victoria continues to lag, having recorded the weakest state performance in 2025. While most respondents still expect price growth, confidence is influenced by higher property taxes, reduced investor participation and softer population flows.
“Victoria stands out for the scale of investor selling, policy settings, and higher holding costs, all of which have weighed on activity, even as first home buyers now account for a larger share of lending,” Lawless said.
While expectations for price growth remain positive, confidence within the industry is becoming more conditional due to affordability ceilings, interest rate uncertainty and uneven regional dynamics, the report said.
“The market is entering 2026 from a position of strength; there is a cloud of uncertainty around inflation and interest rate settings, as well as affordability challenges, all of which are likely to weigh on housing confidence,” Lawless said.
“However, given we aren’t likely to see a material supply response in 2026 either, this should help to offset any downside risk to home values trending substantially lower.”
