(March 2026 Blog) 2026 property outlook: Growth forecast, tax uncertainty and shifting demand
Australia’s housing market is forecast to strengthen in 2026, even as interest rate direction remains uncertain. According to KPMG’s Residential Property Outlook, national house prices are expected to rise 7.7% this year, with unit values projected to increase 7.1%.
Perth is expected to set the pace in 2026, with house prices forecast to climb by almost 13% as population growth and limited supply continue to underpin demand. Brisbane and Darwin are not far behind, both projected to deliver double-digit gains, reinforcing the strength of the northern markets.
Melbourne’s recovery is forecast to gather momentum, with houses tipped to rise 6.8% and units 7.3%, while Sydney is likely to record steadier, more measured growth of around 5–6% as affordability constraints temper demand.
At the same time, rental markets are not expected to ease materially, with rents projected to increase by about 3.5% across both 2026 and 2027. For investors, that combination of capital growth and ongoing rental pressure suggests the market’s underlying fundamentals remain intact.
Policy risk: The CGT debate returns
While price momentum remains strong, tax policy is once again in focus. Debate around reforming the 50% capital gains tax discount has intensified, with billions in federal revenue at stake.
As outlined in a recent API Magazine analysis, the 50% capital gains tax discount is projected to cost $21.9 billion this financial year, with nearly 90% of the benefit flowing to the wealthiest 20% of taxpayers.
Investor groups caution that changes to the CGT discount could prompt further investor exits. Recent research from the Property Investment Professionals of Australia shows that 16.7% of investors sold at least one property in the year to August, while 35% say they would stop investing altogether if the discount were reduced to 25%.
With national vacancy rates at 1.4% and several capitals below 1%, any withdrawal of rental stock would directly affect tenants and supply dynamics.
The debate highlights a significant point for investors: policy settings matter, but strategy matters more.
Growing demand for new homes
Amid tax uncertainty and affordability pressures, buyer interest is rotating toward new housing. PropTrack data shows that searches for new homes in January reached their highest level since January 2022, signalling renewed confidence in the sector after several subdued years.
House and land packages accounted for 80% of new home searches over the past six months, compared with only 13% for new units. By contrast, 40% of established home searches were for units.
Construction cost growth has eased back toward long-term averages, improving confidence. At the same time, incentives such as the 5% Deposit Scheme and Help to Buy are skewed toward new builds.
The key decision is not simply new versus established but identifying where demand is strengthening and supply likely to remain tight.
Victoria leads first home buyer resurgence
Victoria remains central to this national story. According to the Real Estate Institute of Victoria, first home buyer loan commitments in the state rose 3.5% in the December 2025 quarter to 10,283 loans, up 6.9% year-on-year. Victorian buyers now account for nearly one-third of the national total.
The uplift coincides with the launch of the federal Help to Buy scheme in December 2025 and reflects persistent underlying demand despite higher rates and tax debate.
When you line up the data, the pattern is difficult to ignore. Price growth is forecast to continue, even as policy reform remains possible but uncertain. Demand is shifting toward particular segments of the market, and Victoria is accounting for a significant share of renewed first home buyer activity.
In this environment, disciplined acquisition and market selection are critical.
As an expert buyer’s agency, A Game Property Advisory can help you secure a quality property at a great price. Get in touch with Jim by calling 0422 446 170 or emailing jim@agameadvisory.com.au.