Headwinds? Prediction of slower property growth in 2026
At a time when property buyers are feeling overwhelmed by booming prices, one analyst at least says the market may soften a little in 2026.
COULD 2026 be the year that Australian real estate takes a breather? That’s the guarded prediction of Cotality, in the Market Outlook section of their Best of the Best 2025 report.
“The housing market arguably faces more headwinds in 2026,” it states, “and as a result is likely to see a slower pace of growth than 2025.”
Those headwinds include inflation, possible rate hikes, tighter lending criteria, higher unemployment and slower population growth.
“Between higher-than-expected interest rates and the potential for further macroprudential tightening, slower credit growth could result in slower housing value increases,” the report said.
Another headwind was affordability, especially if there’s a credit squeeze.
For a double-income household making average weekly earnings across Australia, an affordable purchase price would be around $1,150,000.
“While this may seem like a high purchase price, it is actually only slightly higher than the median house value of the combined capital cities,” the report said.
That big-city median was $1,112,000 at November 30, which explains the house-hunter skew to cities that haven’t yet reached a million-dollar median.
The Centre for Population projects a slowdown from the current 1.6% annual growth in population to 1.3% in 2025-26, and 1.2% in 2026-27.
“The slowdown is expected to be driven by a substantial drop off in net overseas migration, and will fundamentally ease pressure on dwelling demand,” the report added.
Another factor is housing supply, with “for sale” listings down and new construction approvals fairly low.
None of this means the market will be going backward, just maybe slowing down slightly.
As Cotality notes, “It is anticipated that lower-value housing markets will continue to outperform as a result.”
