Most markets across Australia will perform strongly in 2026. Buyer demand is at very high levels, from both home buyers and investors, at a time of shortage. Demand is being fuelled by an unprecedented high level of infrastructure investment, high population growth boosted by overseas migration, and heightened demand from young buyers thanks to government first homebuyer schemes.

At the same time, there are shortages of everything that matters in residential real estate: we continue to build far too few new dwellings, listings of properties for sale are extremely low everywhere and vacancies continue to hover around historically low levels – where they have been stuck for five years.

Our elected representatives are clueless in dealing with the fundamental issues driving prices and rents higher, including the high cost of building new dwellings. Indeed, any measures they take that impact on the housing crisis always make it worse.

Key drivers for year ahead: Infrastructure investment is a big factor. We have $900 billion in infrastructure projects under way or in planning across the nation – including 144 major hospital developments totalling $115 billion in investment. The infrastructure program is impacting locations all over Australia – creating heightened economic activity and jobs – and therefore demand for real estate. And it is exacerbating the shortage of new dwellings because tradespeople are working on the big-ticket government projects rather than building new houses and units.

Sectors to watch in 2026: The unit sector continues to rise. It’s a major factor in markets across Sydney, Melbourne, Brisbane, Perth, Darwin, Canberra, the Gold Coast and other key regional cities. Relative affordability is a factor but there are other motivations from a range of cohorts driving demand for attached dwellings higher and higher.

Affordability is placing greater focus on cheaper house markets and on unit markets in locations where houses are very expensive. Across the Greater Sydney area, the up-market areas are struggling while those offering relative affordability are thriving. The strongest market sectors in both Melbourne and Brisbane are outer-ring housing markets and near-city unit markets. Two of the strongest markets for rising buyer demand now are the two most affordable capitals, Darwin and Hobart.

Small capitals to outperform: 2026 will be the year of the small capital cities. Darwin already leads on price growth and there is now significant movement in the Hobart and Canberra markets, which haven’t shown any life for several years. The emergence of Tasmania – both Hobart and regional Tasmania – as a nation-leading growth market will surprise many in 2026.