Housing market will see a 10 per cent rise in prices by end of 2026

ANALYSTS are predicting up to a 10 per cent increase in house prices over the next 18 months.

Banking sector economists issued their forecasts as the Reserve Bank continued its easing cycling, reducing the cash rate by 0.25 to 3.6 per cent.

They say that the three rate cuts so far in 2025 and limited supply are pushing property prices higher, which is having knock-on impact of affordability.

ANZ expects state capital city housing prices to rise 5.0 per cent in 2025 and another 5.8 per cent in 2026.

CBA’s 6 per cent rise in 2025 has been revised up from 4 per cent – while the 4 per cent growth it is predicting in 2026 is down from 5 per cent.

“The housing market is picking up thanks to rate cuts, but there are headwinds, so we’re not expecting as big a lift as we’ve seen in the past,” CBA chief economist Luke Yeaman said.

HSBC’s chief economist Paul Bloxham forecast rises of between 4 and 9 per cent in 2026.

But, he added: “If house prices rise that presents a bigger challenge for affordability, and the primary thing we need to do to remedy that is to get more housing supply.

“That’s one of the features of what ought to be in focus with this economic round table that’s happening next week.”

Ray White chief economist Nerida Conisbee is suggesting even greater growth in the housing market.

“If current growth rates are sustained with this additional stimulus, annual house price growth could reach 10 to 12 per cent, potentially pushing the national median towards $1.05 million within 12 months,” she said.

Once lenders pass on the relief to their borrowers, somebody on a $500,000 mortgage will see $74 off monthly interest payments, Canstar says.

The big four banks all forecast the August cut but remain split on the Reserve Bank’s next steps.

Westpac is the most optimistic, predicting cuts in November, February and May.

That takes their cash rate prediction down to 2.85 per cent.

AMP chief economist Shane Oliver is of the same opinion, and expects three more cuts in the cycle.

NAB has forecasted more cuts, with 25 basis point reductions in November and February, lowering the rate to 3.10 per cent.

CBA and ANZ are more conservative, expecting a November cut, ending the cycle at 3.35 per cent.