Australia’s real estate market continues to defy gravity with fresh forecasts pointing to record-breaking prices in 2026. But beneath the surface of growth lies a growing tension between affordability, supply shortages, and shifting seller behaviours.
🔥 Home Prices Headed for New Peaks
Domain’s 2026 Forecast Report predicts house prices across all Australian capital cities will reach new highs next year. Nationally, house prices are expected to jump 6% to $1.34M, while units will climb 5% to $759K.
Sydney is tipped to lead the pack with a 7% increase, pushing the median house price close to $1.92M, while Melbourne follows at 6% growth, reaching $1.17M. Unit markets in Brisbane, Perth and Adelaide are also heating up, with Brisbane forecast to surge 7%—driven by affordability pressures nudging buyers toward lower-priced units.
Rodney McLoughlin notes that as cash rates settle and household incomes recover, we’re entering a phase where strong fundamentals may outpace earlier pessimism.
🏠Auction Market Shows Seasonal Softening
Despite a slip in auction clearance rates (down to 67.8% in Sydney and 66.8% in Melbourne), the figures still reflect a healthy market, bolstered by rising listing volumes in spring.
Dr Nicola Powell of Domain highlights the seasonal nature of the data—volume is up, and demand remains steady, just not strong enough to soak up the extra supply at boom-time prices. Sellers expecting peak pricing may need to reset expectations.
⚖️ One Million Homeowners in Housing Limbo
New research reveals a staggering one million Australians are delaying their next move due to a “sell-first or buy-first” dilemma. Many fear missing out on the right property if they sell too soon—or being left holding two mortgages if they buy first.
A lack of awareness about bridging finance is part of the problem. Rodney McLoughlin recommends homeowners explore flexible loan options now emerging in the market, like bridging products that allow up to 12 months to sell after buying—without early repayments. These can significantly ease the pressure and simplify transitions.🏖️ Holiday Homes Face New Tax Headwinds
From July 2026, the ATO will tighten deductions on holiday homes deemed not “genuinely available” for rent during peak seasons. That means no more tax claims if your beach house sits empty at Christmas.
Chartered accountants warn that restrictions like “no pets” or inflated rental prices that deter bookings could raise red flags. Holiday homeowners should review their rental strategies and seek professional advice to stay compliant.
📉 Market Momentum to Moderate Late 2026
While strong gains are expected through early 2026, analysts caution that affordability limits and cautious rate movements will eventually temper momentum. The second half of the year may see growth taper as borrowing capacity strains under rising prices.
Rodney McLoughlin suggests that while timing the market is difficult, staying informed and strategic—especially for upgraders and investors—will be critical in navigating the months ahead.
Real Estate Newsletter
This article is a curated summary of various news stories from the past week, offering insights and updates on the real estate market. 21 November 2025.
Rodney McLoughlin is a trusted real estate professional with deep insights into the Australian property market. For personalized advice and market expertise, reach out to Rodney today.
