Major cities tipped for continued growth as market enters new phase
Australia may soon see five of its capital cities with median home prices above $1 million, according to new forecasts from property consultancy Rethink Group.
The company’s chief executive, Scott O’Neill, has indicated that Sydney and Melbourne are set to regain their lead in the national property market by 2026, following a period where smaller capitals outperformed. “We’re post-downturn and pre-recovery,” he said.
“Historically, the highest returns come from buying exactly where we are now after adjustment, before the rush. Population is growing, supply remains constrained, interest rates are easing, and borrowing power is expanding. The smart money isn’t waiting, it’s positioning now.”
Melbourne back in vogue
O’Neill (pictured right) projects Melbourne will see the strongest house price growth, with a 5.2% rise this year and 6.6% in 2026, pushing the city’s median to about $1.1 million.
Sydney is expected to follow, with a 7.8% increase, resulting in a median of around $1.83 million.
Data from the October PropTrack Home Price Index showed Sydney’s median home value (combining houses and units) at $1.228 million, while Melbourne’s stood at $846,000.
O’Neill also expects southeast Queensland to maintain its momentum.
The PropTrack index recorded Brisbane’s median house price at $1.126 million in October, with the overall median for houses and units at $976,000.
The Gold Coast and Sunshine Coast are anticipated to remain among the fastest-growing markets, supported by infrastructure spending and lifestyle factors.
Adelaide and Perth are forecast to reach or exceed $1 million in median home value, though the rate of growth is slowing after two years of significant increases. PropTrack data places Adelaide’s median at $880,000 and Perth’s at $899,000.
2026 price predictions
“If you’ve been waiting for a crash, you missed the bottom. It has already happened,” O’Neill said. “The next two years will reward investors who buy quality assets before the borrowing capacity surge.”
Rethink Group’s projections for 2026 median prices are as follows:
- Sydney: $1.83 million (up 7.8%)
- Melbourne: $1.1 million (up 6.6%)
- Brisbane: $1.09 million (up 6-8%)
- Adelaide: $1.05 million (up 5-6%)
- Perth: $950,000–$1 million (up 5-6%)
- Regional Queensland, New South Wales and Victoria: up 5-8% depending on infrastructure and supply
- Tasmania and Northern Territory: up 3-5% due to affordability and low vacancy rates
O’Neill cautioned that lower interest rates and reduced lending restrictions could further intensify competition among buyers. “The Reserve Bank of Australia (RBA) is expected to cut toward 3% by late 2026, significantly boosting borrowing capacity and demand,” he said.
Rethink Group’s research highlights that investors are now focusing on high-quality residential and commercial properties in local government areas (LGAs) with strong yields, infrastructure investment, and limited future supply.
“2026 will be defined by clarity and confidence,” O’Neill said. “The data shows we’re past the bottom. Investors who act now will look back on this as the turning point.”
The analysis follows comments from Ray White senior analyst Atom Go Tian, who noted a new phase of price growth was emerging.
“The emerging fourth phase suggests the future belongs to regions that combine both lifestyle appeal and economic substance,” he said, adding that the past decade showed “sustainable regional growth requires either extreme affordability, genuine employment drivers or, increasingly, both".
Local growth areas
Rethink Group has identified several LGAs as likely growth areas for 2026, including:
- Queensland: Moreton Bay, Ipswich, Sunshine Coast
- New South Wales: Shoalhaven, Wagga Wagga, Central Coast
- Victoria: Greater Bendigo, Ballarat City, City of Casey (South-East Melbourne)
- South Australia: City of Charles Sturt, Onkaparinga, Salisbury
- Western Australia: Swan, Mandurah, Stirling
- b Launceston, Hobart, West Tamar
- Northern Territory: Palmerston, Darwin, Litchfield
Top suburb picks for 2026, based on affordability, infrastructure, yield compression and population growth, include Caloundra West, Narangba, Buderim, Ripley and Morayfield in Queensland; Nowra, Toukley, South Dubbo, Gobbagombalin and Armidale in New South Wales; and Frankston South, Craigieburn, Delacombe, Golden Square and Pakenham in Victoria.
Also included in the list are Semaphore, Christies Beach, Paralowie, Lightsview and Nairne in South Australia; Dudley Park, Ellenbrook, Innaloo, Rivervale and Bayonet Head in Western Australia; Kings Meadows, Trevallyn, Legana, Youngtown and Riverside in Tasmania; and Durack, Rosebery, Zuccoli, Nightcliff and Coolalinga in the Northern Territory.
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