Property Price Predictions: What’s Really Ahead for FY26? - August Market Update 2025

As we dive into the new financial year, one question keeps coming up in all my regular conversations with home buyers and investors: Where are property prices heading next?

The latest Domain Price Forecast Report for FY26 has landed, and while the headlines show moderate growth, what lies beneath is a story of shifting momentum, interest rate tailwinds, and opportunities hiding in plain sight.

Let’s unpack what’s ahead.

(Source: Domain Forecast Report FY25–26)

• Sydney and Melbourne are poised to lead the next price growth phase, driven by falling interest rates and strong income growth. These cities are the most sensitive to rate cuts – and we’re seeing that sensitivity kick in.
• Perth, Adelaide and Brisbane – the standouts since 2020 – are now maturing. Affordability pressures and supply constraints are beginning to slow their momentum.
• Interest rates are doing the heavy lifting. The RBA has already cut 50 basis points in 2025, and the market is pricing in another 80bps by mid-2026. That’s a powerful tailwind for buyers and a clear signal for those sitting on the sidelines.
• Affordability is stretched, but rising incomes, stronger employment, and targeted first-home buyer support are cushioning the market from major shocks.
• Supply remains tight, and we’re still unlikely to hit the Federal Government’s target of 240,000 new homes this year. Until supply catches up, prices have room to rise.

Most bank economists are still wearing conservative lenses

• CBA (June 2025): Forecasts national dwelling prices to rise 5–6% in 2025, tapering into 2026.
• ANZ: Sees flat to moderate growth, noting that interest rate cuts will drive confidence but affordability remains a cap.
• Westpac: Predicts price growth moderating from recent highs, but sees strength returning to Sydney and Melbourne.
• NAB: Recently upgraded their outlook to 6% growth in 2025, citing strong buyer sentiment and under-supplied markets.

So, while Domain is slightly more bullish, particularly on Sydney and Melbourne, the general consensus is now aligned: the market is steadily rising but not racing ahead.

A headline like “Melbourne prices to rise 6%” is helpful, but misleading if you’re a buyer or investor.

The truth? There’s no such thing as the “Melbourne market.” Or the “Sydney market.” What we actually have is a patchwork of micro-markets, and they’re not all moving in unison. Some suburbs will do 10%, others will go sideways or even backward.

This is where many buyers go wrong. They stay in their comfort zone. They default to “what they know.” They overlook the suburbs with real momentum and growth fundamentals.

Even home buyers often forget that their own property is a major financial asset. Yes, you’ll live there, but it should also grow in value. That means applying the same rigour as an investor: researching local supply and demand, gentrification trends, infrastructure investment, and the nuances that drive long-term growth.

Likewise, investors need to think beyond their postcode. Borderless investing is a smart strategy in this market, especially when yields are tight and growth prospects vary widely across cities and regions.

What drives performance at the suburb level?

• Infrastructure spending
• Diverse and abundant employment opportunities
• Housing type and scarcity
• Gentrification and lifestyle appeal
• School zones and demographics
• Access to public transport

This is where the real value lies, understanding local drivers and picking suburbs with the right fundamentals for outperformance. The key is to look beneath the surface, and that’s where we can help. Our team has the data, experience, and networks to identify high-performing suburbs before they hit the headlines.

We’re in a transition phase. The rate cuts are starting to bite, and we’re seeing increased urgency and confidence across all buyer types, particularly in Sydney, Melbourne and Brisbane.

If you're waiting for the market to “cool,” you might be waiting a long while. As I have repeatedly outline in previous blogs and updates, we are now entering a long decade of structural under-supply – we are simply not building enough property to satiate demand. Conditions are warming, and competition is heating up, especially in suburbs with tight stock and high appeal.

Now is the time to:

• Get your finance pre-approved
• Understand which suburbs suit your goals
• Engage a professional who lives and breathes the local market

Because success in this market isn’t about predicting headlines, it’s about buying wisely, with clarity and strategy.

Want help finding the right property in the right suburb at the right price? Let’s talk. Book a free discovery call with our expert buyers’ agents today.

To your future property success,

Rich Harvey CEO & Founder | Propertybuyer

Australia’s Most Awarded Buyers’ Advocates

www.propertybuyer.com.au

Give us a call on 1300 655 615 or click here to start a conversation about your brief.

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