If you own property in Australia, are thinking about buying, or simply want to understand where the market is heading — the forecasts just released by ANZ and NAB are essential reading.
Australia’s housing market has entered genuinely new territory in 2026. After a strong 2025 that delivered double-digit gains in several cities, the landscape has shifted sharply. Interest rates are rising again. Consumer confidence has weakened. And two of the country’s Big Four banks have dramatically revised what they expect to happen to home values over the next 18 months.
The headline? Sydney and Melbourne are facing outright price falls. Perth, Brisbane and Adelaide are still growing — but their booms are cooling. And by 2027, the whole picture could flip again.
Here is everything you need to know about the ANZ and NAB house price forecasts for 2026 — city by city, driver by driver, and what it means for you.
Table of Contents
- The 2025 Starting Point: How Strong Was the Market?
- ANZ House Price Forecast 2026: The Full Breakdown
- NAB House Price Forecast 2026: A Different Angle
- City-by-City Forecast Comparison: ANZ vs NAB vs Westpac
- What Is Driving the Forecasts?
- The RBA Rate Rises: The Single Biggest Factor
- What About Rents in 2026?
- Will Prices Recover? What Banks Predict for 2027–2028
- What Does This Mean for Buyers, Sellers and Investors?
- Frequently Asked Questions
1. The 2025 Starting Point: How Strong Was the Market?
To understand where the banks think prices are going, you first need to appreciate just how fast they rose.
Capital city values rose 8.5% on the PropTrack Home Price Index in 2025 — a strong result that followed rate cuts from the Reserve Bank of Australia through the year.\
The gains were far from uniform. Perth, Brisbane and Adelaide were running at exceptional growth rates well above the national average, while Sydney and Melbourne were already showing signs of sensitivity to interest rate movements.
Then 2026 arrived with a sharp change in conditions.
The RBA has raised the cash rate three times in 2026 — in February, March, and again in May — taking it from 3.60% to 4.35%, effectively unwinding all three of the cuts delivered through 2025. That reversal has reshaped every major bank’s outlook.
2. ANZ House Price Forecast 2026: The Full Breakdown
ANZ’s Most Recent Position (June 2026)
ANZ’s latest forecast represents its most dramatic downgrade yet — a stark reversal from the growth story it was telling just months ago.
In a sharp reversal from previous expectations of continued growth, ANZ now expects capital city housing prices to decline 2.1 per cent in 2026 and a further 3.3 per cent in 2027, citing a combination of higher interest rates, geopolitical instability and changes to investor taxation settings. ANZ had previously anticipated prices would rise 2.8 per cent this year and 2.1 per cent next year.
Sydney and Melbourne Bear the Brunt
Sydney and Melbourne are expected to bear the brunt of the downturn. ANZ forecasts Sydney prices will fall 8.4 per cent in 2026, followed by another 2.9 per cent decline in 2027. Melbourne is projected to record a 7.7 per cent fall this year and a further 2.3 per cent drop next year.
These are significant figures — representing tens of thousands of dollars wiped from median property values in Australia’s two most expensive cities.
Credit Growth Tightening
The financial plumbing behind the market is also under pressure. ANZ forecasts housing credit growth will almost halve, easing from 7.1 per cent in early 2026 to just 2.9 per cent by early 2028 as investor borrowing retreats. Investor credit growth is expected to turn negative, falling from a peak of 10.4 per cent to minus 0.8 per cent over the same period.
The April Revision
Even ANZ’s April 2026 forecast — before the most dramatic downgrade — showed the shift clearly. ANZ Research stated: “The uncertain backdrop and higher rates are likely to soften Australia’s housing market in 2026, so ANZ Research now expects capital city housing prices to lift 2.8% (previously 4.8%).” Sydney and Melbourne housing prices were already below their October 2025 levels, and properties in the top quartile of these markets had declined for five consecutive months.
ANZ economist Madeline Dunk explained the divergence clearly. “Sydney and Melbourne markets are showing signs of slowing, and we expect them to underperform in 2026,” said ANZ economist Madeline Dunk. “Adelaide, Brisbane, Perth, Hobart and Canberra are likely to underperform in 2027 after a period of strong growth across many of the ‘smaller’ capitals.”
She pointed to an important structural nuance: Dunk noted that “very low” listing volumes in several smaller capitals had helped keep prices supported into 2026. “As the year progresses, higher rates, slowing activity and affordability constraints are likely to slow price growth,” she added.
Is a Prolonged Slump Coming?
Despite the sharp downgrades, ANZ is not predicting a prolonged crash. ANZ does not expect a prolonged slump. Ongoing housing undersupply, constrained construction capacity and anticipated Reserve Bank rate cuts in late 2027 are expected to support a recovery, with capital city prices forecast to rebound by 3.8 per cent in 2028.
ANZ economists Adam Boyton and Madeline Dunk are clear on the structural underpinnings: “We think widespread falls in housing prices are unlikely given the structural tightness of the market. Higher interest rates and building costs are likely to negatively impact supply, while population growth is expected to remain solid.”
3. NAB House Price Forecast 2026: A Different Angle
While ANZ has moved firmly into negative territory for the full capital city average, NAB’s headline number tells a more complex story.
NAB’s National Headline
NAB’s central forecast is approximately 5% growth in the eight-capital dwelling price index over 2026. That headline is a weighted average of very different city paths: Perth and Brisbane decelerating from exceptional run-rates, Sydney and Melbourne troughing before stabilising later in the year.
National Australia Bank is more conservative than some peers, projecting around 5% growth in the eight-capital-city dwelling price index over 2026. Professional commentary suggests that the main constraint on the outlook is monetary policy.
The NAB Housing Monitor: April 2026
NAB’s official monthly data publication reinforces the nuance. Dwelling prices across Australia’s combined capital cities rose 9.3% over the past year, according to NAB Economics’ Monthly Housing Monitor for April 2026. Prices increased 0.6% in March, though momentum has slowed in recent months. Mid-size capitals continue to outperform.
NAB’s Market-Within-a-Market Warning
NAB’s April 2026 Housing Monitor carried a significant structural message. The NAB Housing Monitor is the clearest articulation yet from a Big Four bank that Australia no longer has one housing market — it has four. The mid-size capitals are running hot, Sydney and Melbourne have rolled over, rents are still tight even where prices are softening, and the construction pipeline — despite sitting approximately 35% above its pre-pandemic average — cannot deliver completions fast enough to meet structural demand.
4. City-by-City Forecast Comparison: ANZ vs NAB vs Westpac vs KPMG
This is where the forecasts get most useful — and most divergent.
| City | ANZ 2026 Forecast | NAB 2026 | Westpac 2026 | KPMG 2026 |
|---|---|---|---|---|
| Sydney | −8.4% (latest) / −0.7% (April) | Stabilising H2 | −3% | +5.8% |
| Melbourne | −7.7% (latest) / −1.7% (April) | Troughing | −4% | +6.8% |
| Brisbane | +9.7% (April) | Decelerating | +9% | +10.9% |
| Perth | +12.3% (April) | Decelerating | +13% | +12.8% |
| Adelaide | Slowing late 2026 | Slowing | +7% | +6.8% |
| National Average | −2.1% (latest) | ~+5% | Flat overall | +7.7% |
Note: ANZ’s June 2026 downgrade represents a significant revision from its April position. The table reflects both timepoints for transparency. Westpac and KPMG figures sourced from their respective publications.
Westpac’s housing forecast update projects dwelling price growth to end flat for 2026 across the major capital cities. Sydney and Melbourne are expected to see outright declines of 3% and 4% respectively, with growth remaining positive but slowing more abruptly in Brisbane at 9%, Perth at 13% and Adelaide at 7%.
KPMG takes a more optimistic view, forecasting national house prices to rise by 7.7% in 2026 and unit prices by 7.1%, with Perth expected to lead house price growth at 12.8%, followed by Brisbane at 10.9% and Darwin at 10.5%. Melbourne, Sydney and Canberra are forecast to record more moderate gains of 6.8%, 5.8% and 4.7% respectively.
5. What Is Driving the Forecasts?
Factor 1: Interest Rate Shock
The single biggest driver of every forecast downgrade is the rapid reversal of the RBA’s interest rate settings.
Since the escalation of the Middle East conflict in late February, ANZ Research added another 25 basis point hike to its RBA profile, now expecting the cash rate to peak at 4.35% in May. This would fully reverse the 75 basis points of cuts seen in 2025 and would leave rates in what ANZ Research views as restrictive territory.
Confidence has fallen sharply in recent weeks, with ANZ-Roy Morgan Australian Consumer Confidence near a record low.
Factor 2: Investor Taxation Changes
ANZ cited changes to investor taxation settings as one of the three key factors behind its dramatic downgrade — alongside higher interest rates and geopolitical instability.
The Australian property market in 2026 has entered genuinely new territory, with another rate rise from the Reserve Bank and the most significant tax changes to property investment in nearly three decades landing within weeks of each other.
Factor 3: Geopolitical Instability
The uncertain backdrop driven by the escalation of the Middle East conflict has directly impacted consumer confidence and investment appetite across Australia’s property markets.
Factor 4: Housing Undersupply — The Floor Under Prices
Despite all the headwinds, every bank agrees on one fundamental point: supply is still too tight to allow a prolonged crash.
The construction pipeline — despite sitting approximately 35% above its pre-pandemic average — cannot deliver completions fast enough to meet structural demand. Population growth remains solid and supply bottlenecks continue to shape housing market outcomes across Australia.
KPMG’s January 2026 residential property outlook estimated that “new dwelling completions would need to be around 17% higher than current forecasts for above-trend rental growth to be pulled back to normal levels while still allowing for expected population growth.”
6. The RBA Cash Rate: The Factor Connecting Everything
Understanding the RBA’s path is essential to interpreting any bank forecast.
The RBA has now raised the cash rate three times in 2026 — in February, March, and again in May — taking it from 3.60% to 4.35%, effectively unwinding all three of the cuts delivered through 2025. All four major banks passed on the full 25 basis points from the May decision to existing variable-rate customers within days of the announcement.
CBA, NAB and ANZ all expect the RBA to leave the cash rate unchanged for the rest of 2026 and for rates to fall in 2027. Westpac expects two further cash rate hikes in August and September 2026, followed by cuts — but not until 2028.
7. What About Rents in 2026?
Falling prices don’t necessarily mean relief for renters. In fact, the rental market tells a different story.
Rental conditions remain structurally tight: vacancy is at 1.6% according to NAB, with advertised rent growth running at 5.9% on a six-month annualised basis. NAB’s Q1 2026 survey of property professionals forecasts further 4–6% rent increases through 2026.
Rent growth is running at nearly double the wage growth rate — 5.9% in rents versus 3.4% in wages per ABS Q4 2025 Wage Price Index data — a structural signal of deteriorating rental affordability.
This means that even in a softening purchase market, renters face continued cost pressure — and investors calculating rental yields against lower purchase prices may find better returns available by 2027.
8. Will Prices Recover? What Banks Predict for 2027–2028
Despite the near-term softness, banks are not predicting a prolonged downturn. The medium-term story remains constructive.
ANZ on 2027–2028:
Sydney and Melbourne are expected to bounce back quickly from a year of negative growth. Melbourne is forecast to be the fastest-growing Australian city in 2027, recording price growth of 2.9%, followed by Sydney and Darwin at 2.6%.
Anticipated Reserve Bank rate cuts in late 2027 are expected to support a recovery, with capital city prices forecast to rebound by 3.8 per cent in 2028.
Perth and Brisbane’s Turn to Underperform:
Perth — forecast to clock stellar price growth of 12.3% in 2026 — is expected to record just 1.5% growth in 2027. Brisbane, tipped to grow at 9.7% in 2026, is forecast to slow to just 1.4% growth in 2027. ANZ expects Adelaide, Brisbane and Perth to underperform in 2027.
The cycle is rotating — and knowing where you are in it matters enormously for investment timing.
9. What Does This Mean for Buyers, Sellers and Investors?
For Buyers in Sydney and Melbourne
The ANZ and NAB forecasts suggest 2026 may offer genuine buying opportunities in these two cities — particularly in the second half of the year when price softness is expected to be most pronounced. However, buyers should carefully assess their mortgage serviceability at the current 4.35% cash rate and plan for rates remaining elevated through 2026 and potentially into 2027.
For Sellers in Sydney and Melbourne
If you are considering selling in Sydney or Melbourne, the window before further softness may be narrowing. The banks’ forecasts suggest price pressure is still building through 2026 before a potential recovery in 2027.
For Property Investors
Investors cannot rely on the headline national forecast. City-level dispersion is the actionable signal — not the Australia average. Perth and Brisbane are still growing in 2026 but are forecast to slow sharply by 2027. Sydney and Melbourne may offer better entry points at the bottom of their current cycle, with rental yields improving as purchase prices soften while rents continue rising.
Over the long term, the fundamentals haven’t changed — population growth, housing undersupply, and Australia’s wealth trajectory will continue to underpin property values. Strategic investors who buy well-located, investment-grade properties and hold them for the long term will continue to outperform.
❓ Frequently Asked Questions
Q1: What is ANZ’s house price forecast for 2026?
ANZ’s most recent forecast (June 2026) projects capital city housing prices to decline 2.1% in 2026 and a further 3.3% in 2027, with Sydney expected to fall 8.4% and Melbourne 7.7%. This is a sharp reversal from ANZ’s April forecast of 2.8% growth, driven by additional rate hikes, geopolitical instability and investor tax changes.
Q2: What is NAB’s house price forecast for 2026?
NAB’s central forecast projects approximately 5% growth in the eight-capital dwelling price index over 2026. However, NAB notes this is a weighted average of very different city outcomes — with Perth and Brisbane decelerating and Sydney and Melbourne expected to trough before stabilising in the second half of the year.
Q3: Will Sydney house prices fall in 2026?
According to ANZ’s most recent forecast, Sydney house prices are expected to fall 8.4% in 2026. ANZ’s April forecast had projected a smaller decline of 0.7%. Westpac forecasts a 3% fall for Sydney. KPMG is more optimistic, projecting 5.8% growth — reflecting the significant divergence in bank outlooks.
Q4: Will Melbourne house prices fall in 2026?
ANZ’s latest forecast projects Melbourne house prices to fall 7.7% in 2026, while Westpac projects a 4% fall. ANZ’s April estimate had been a more modest 1.7% decline. Both Sydney and Melbourne are the most rate-sensitive markets in Australia.
Q5: What is driving Australian house price forecast downgrades?
The three primary drivers are: rising RBA interest rates (now at 4.35% after three hikes in 2026), changes to investor taxation settings described as the most significant in nearly three decades, and elevated geopolitical uncertainty following the escalation of the Middle East conflict which has pushed consumer confidence to near-record lows.
Q6: Are Perth and Brisbane house prices still rising in 2026?
Yes — but the pace is slowing. ANZ forecast Perth to grow 12.3% in 2026 and Brisbane 9.7%, though both cities are expected to underperform sharply in 2027, slowing to just 1.5% and 1.4% growth respectively.
Q7: What is the RBA cash rate in 2026?
The RBA has raised the cash rate three times in 2026 — in February, March and May — bringing it from 3.60% to 4.35%. This has fully reversed the three rate cuts delivered in 2025. CBA, NAB and ANZ expect rates to remain on hold for the rest of 2026, while Westpac forecasts two further hikes in August and September.
Q8: When will Australian house prices recover?
ANZ expects a recovery in capital city house prices by 2028, forecasting a 3.8% rebound driven by anticipated RBA rate cuts in late 2027. Sydney and Melbourne are expected to lead the 2027 recovery, while Perth and Brisbane are forecast to slow significantly before finding their floor.
Q9: Is it a good time to buy property in Australia in 2026?
The answer depends heavily on your city, financial position and time horizon. Sydney and Melbourne may offer improving entry conditions as prices soften in 2026. Perth and Brisbane remain strong in 2026 but face a sharper slowdown by 2027. The structural case for Australian property — undersupply, population growth, constrained construction — remains intact regardless of short-term price movements. Always consult a licensed financial adviser before making property decisions.
Q10: What do banks predict for Australian rents in 2026?
Despite softening purchase prices, rents remain under significant upward pressure. NAB forecasts further 4–6% rent increases through 2026, with rental vacancy at just 1.6% nationally. Rent growth is running at nearly double the rate of wage growth, meaning affordability for renters continues to deteriorate even as purchase prices soften in some markets.
Conclusion: One Country, Four Property Markets
The ANZ and NAB forecasts for 2026 deliver one essential message: Australia no longer has a single housing market.
Sydney and Melbourne are softening — and in ANZ’s latest forecast, falling sharply. Perth and Brisbane are still running hot but approaching the end of their exceptional growth cycles. Adelaide sits in between. And rents across the country remain structurally elevated regardless of what happens to prices.
The banks agree on the long-term floor: population growth, housing undersupply and constrained construction will prevent any prolonged crash. But the near-term path — shaped by rising interest rates, investor tax changes and geopolitical uncertainty — points to real caution for 2026 and into 2027.
Whether you’re a first home buyer, an investor, or simply trying to understand your equity position — reading these forecasts city by city is the only way to make an informed decision in this environment.
This article is for informational purposes only and does not constitute financial or property investment advice. Forecasts from financial institutions are subject to change and should not be relied upon as the sole basis for any investment decision. Always consult a licensed financial adviser.
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