Perth is again expected to be the strongest performer in the country for house price growth in 2026.
According to KPMG’s Residential Property Outlook, released on Wednesday, Perth house prices are tipped to grow by 12.8 per cent this year and 5.1 per cent next year.
Perth unit prices are also expected to increase by 11.6 per cent in 2026 and 3.9 per cent in 2027.
KPMG chief economist Dr Brendan Rynne said Perth was predicted to experience the biggest jump of any capital city, defying previous expectations of much weaker growth this year.
“Perth continues to record the fastest population growth in the country and limited housing supply is keeping upward pressure on prices,” Rynne said.
“Still, house prices remain on the more affordable side for first home buyers and the 5% deposit scheme is helping to drive demand.”
Perth property prices increased by 16.4 per cent in 2025, the highest in the country. The median house price is now $1,087,762, according to Domain.
The KPMG report found Perth would likely continue to have strong growth over the coming years as it continued to record the fastest population growth in the country.
First home buyer assistance and a shortfall in new home building will also combine to push property prices higher this year.
And the growth is tipped to continue across all capital cities even if the Reserve Bank lifts the cash rate next week.
Rynne said the balance between demand for homes and supply of homes was “still out of whack”.
“We’re still short on housing,” he said. “And the one thing that the government could be doing is anything it can humanly do possible to help facilitate the production of housing.”
He said the expansion of first home buyer assistance had a significant effect on housing prices in the smaller cities already.
The Australian Government’s 5% Deposit Scheme has assisted more than 21,000 people into home ownership since it expanded from October 1 to offer low-deposit loans without lender’s mortgage insurance to an unlimited number of buyers on any income, and the eligible property price caps were also increased.
Recent research from Cotality found that homes with values under the scheme’s price caps rose by 3.6 per cent in the December quarter, faster than a 2.4 per cent rise for homes above the price cap in the same period, although the research house thought there may be some investors competing with first home buyers in the lower price brackets.
Treasury modelling of the policy suggests it will push up property prices by a modest 0.5 per cent over six years.
On interest rates, Rynne assumes that the cash rate will stay on hold in the short term and that inflation will continue to come down. The next official inflation figures are due on Wednesday.
But even if the cash rate was to rise, which he does not expect, he said a 25 basis point rise would only put the brakes on price growth, but not slam them on.
“There’s still other factors that influence house prices and interest rates is really a short-term driver,” he said.
AMP chief economist Dr Shane Oliver expects Australia’s property prices to continue to rise, due to interest rate cuts in 2025 and the ongoing housing shortage which is helping to drive up values.
But the pace of growth is unlikely to be as strong through 2026, with property prices nationally potentially rising at between 5-7 per cent, compared to last year’s 8.5 per cent, Oliver said.
“Economists tend to be split between rates on hold or rate hikes, and the money market has around two hikes priced into this year, potentially starting as early as next week,” he said.
“So, there’s been a big turnaround in interest rate expectations that will act as a dampener on the property market.”
A further deterioration in affordability will also constrain prices, Oliver said, forcing buyers into cheaper options like units.
“The data shows that we’re seeing more strength in lower price points … in the more affordable end of the market, than in the upper end,” he said.
Due to this, units may rise at a faster pace than houses, Oliver said, with a projection of 7 per cent growth for units in 2026 and 5 per cent for houses.
He said the government help for first home buyers provided a boost to the lower end of the property market.
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