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Australia is in the midst of a housing boom. Home prices have been rising in every capital city, driven by a shortage of properties on the market and three interest rate cuts from the Reserve Bank, that's given buyers more purchasing power. The government has also expanded the First Home Guarantee scheme boosting demand for homes at the lower and middle end of the market. But affordability constraints are starting to bite in the big capital cities, and the RBA is now threatening interest rate hikes, which experts say will slow price growth. Cotality's head of residential research Australia, Eliza Owen, says expectations are starting to shift as incomes aren't growing as fast as house prices. She expects softer growth for the national market in 2026 and a bit of a dip in more expensive markets. It's also taking more than a decade to save a 20 per cent deposit.
2025 also saw a surge of investors, which triggered a response from the banking regulator, APRA. It's clamping down on overstretched buyers by limited high debt-to-income loans to 20 per cent from 1 February.
For Australians, who don't own their own homes, finding a rental is becoming more expensive and it's set to get worse. Domain is forecasting rents to hit record highs by the end of 2026. Domain's chief of research and economics, Nicola Powell says asking rents are roughly 50 per cent higher now than they were five years ago. This program looks at where the housing market is going in the next 12 months. It's presented by Alicia Barry.
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