Market is strong and home prices higher in 2026, report
Government policies and inflation rates have out a fire under the property market, particularly in the second half of 2025. But the heat has really come to Western Australia, pushing prices higher than expected. Finding bargains in Perth this year will be hard, a national market report claims.
BUYING a house in Perth this year is about to get a whole lot harder, according to a respected property report released this week.
KPMG’s latest Residential Property Outlook says house prices nationally could rise by as much as 7.7 per cent in 2026.
And Perth is leading the way, with house prices expected to surge by almost 13 per cent and unit prices up by 11.6 cent.
KPMG chief economist Dr Brendan Rynne said the strength of the market during the latter half of 2025, driven by government policies and inflation, has pushed house prices higher than expected.
“The strong momentum in the first half of 2025 should have moderated as affordability pressures continued to spook buyers. But, instead, the second half of last year accelerated growth further, especially in already overheated cities like Perth and Brisbane, supported by the expanded five per cent Deposit Scheme,” Dr Rynne said.
“Despite the fact there aren’t enough houses being built, buyers in these cities are prepared to pay more than the supply shortage would justify.
“As a result, at the entry level, the market will continue outperforming this year, with more young people seizing the opportunity to break the rent cycle and lock in their first home sooner, intensify competition at the affordable end and ensuring prices remain firm.”
Brisbane is expected to see a 10.9 per cent rise in house prices this year, with Darwin not far behind with a 10.5 per cent lift.
Adelaide (8.2%), Melbourne (6.8%), Sydney (5.8%), Hobart (5.4%) and Canberra (4.7%) will see house rises increase.
“Adelaide is beginning to see affordability issues emerge which may temper demand and redirect some buyers to more affordable cities such as Melbourne, but supply has also picked up which will keep growth at a more moderate pace,” Dr Rynne said.
“Melbourne’s comparatively lower price base compared to other capital cities is likely to provide room for further growth and help sustain momentum over the coming years.
“While the five per cent Deposit Scheme offers the higher price cap for Sydney of $1.5 million broadening eligibility, in practice most first-home buyers are still constrained by borrowing capacity and cannot afford the mortgage required, even at the lower end of the city’s market.
“As a result, Sydney’s outlook is one of balanced growth this year, underpinned by strong fundamentals, but limited by persistent supply and affordability issues.”
Dr Rynne said: “While the five per cent Deposit Scheme offers the higher price cap for Sydney of $1.5 million broadening eligibility, in practice most first-home buyers are still constrained by borrowing capacity and cannot afford the mortgage required, even at the lower end of the city’s market.
“As a result, Sydney’s outlook is one of balanced growth this year, underpinned by strong fundamentals, but limited by persistent supply and affordability issues.”
The Report suggests rents across the country are expected to increase by around 3.5 per cent across 2026 and 2027, remaining above the long-run average of three per cent.
“Australia’s tight rental market continues to be driven by the structural imbalance between strong population growth over recent years and limited housing supply,” Dr Rynne said.
