The Trends Set to Shape Australia’s Property Market in 2026

This is an excerpt from Domain's article 'The trends set to shape Australia’s property market in 2026.'

Interest rate cuts, first-home buyer incentives, rezoning, interstate migration and renovation fatigue will be among the main factors influencing the real estate market in 2026.

Together, these forces are reshaping how buyers move, how sellers price, and how quickly homes transact. 

In Melbourne, RT Edgar Whitehorse director Juliette Zhou says interest rates had a significant impact on the market this year, and she expects 2026 will be similar.

“In August, we had an interest rate drop and it really made the market boom but for a very short period of time,” she says.

“I think January will be stable. We won’t see a boom of increased demand all of a sudden. I think it will really depend on what the Reserve Bank says in February.

“I think if there is a rate cut coming in February, then consumer confidence will come back and the market will be better.”

Zhou says the extension of the First Home Buyer Guarantee Scheme, including lifting the property cap in Melbourne to $950,000, would continue to underpin that segment of the market.

“The first-home buyers are very active,” she says.

“In the past few weeks, the clearance rate has been high. Our transaction levels are pretty good. But compared to October, I think it’s partially because a lot of owners have come down in their expectations to meet the market.”

While first-home buyers are active, Zhou says investors have fled the market, and she doesn’t see that changing significantly in 2026.

“There are a lot of restrictions, land tax, vacancy tax, especially on overseas landlords, so we’ve sold a lot of investment properties,” she says.

“About 95 per cent of the active buyers in the market are home buyers.”

Policy settings and population shifts to drive national market

Real estate speaker, coach and Domain Group Ambassador Josh Phegan expects 2026 to be defined by stable conditions, substantial transaction volumes and a surge in first-home buyer activity. 

He says the lower and middle price brackets will be particularly active, with solid turnover driven by buyers who are motivated by necessity rather than speculation.

Phegan also predicts the top end of the market will perform well, especially for high-quality homes, as Baby Boomers trigger a once-in-a-generation lifestyle shift. 

Over the next decade, he expects many older Australians to relocate to warmer climates, helping make Brisbane, the Gold Coast and the Sunshine Coast some of the country’s standout performers in 2026.

Victoria, he says, will remain relatively subdued.

“Victoria will stay relatively sluggish unless there’s a significant change in government policy,” he says.

“For example, if the government did make a change on land tax, we would expect that the Victorian market would all of a sudden turn to a sellers’ market and boom very quickly.

“A lot of investors would return to that market because it’s seen as being some of the best value real estate in Australia, because it has not grown as much as other locations.”

Phegan also believes the expanded Home Guarantee Scheme will have a short, sharp inflationary effect on lower-priced stock early in the year, boosting competition and prices across the first-home buyer segment.