Affordable capital cities and outer areas set to step into the spotlight in 2026

Confidence has returned to the property market, but price rises in the year ahead are likely to be at a slower and more uneven pace, according to LJ Hooker.

Australia’s most iconic real estate brand is anticipating more affordable capital cities, such as Perth, Adelaide and Brisbane, to continue to outperform Sydney and Melbourne as local supply and demand play a bigger role than interest rates.

Mathew Tiller, Head of Research and Business Intelligence, said once the Reserve Bank of Australia shifted to cutting rates, buyers adjusted to the new level of repayments, turning up at open homes and auctions in larger numbers.

“Interest rates are expected to stay on hold for most of 2026, so the cash rate becomes the new normal rather than the main driver,” he said.

“Against that backdrop, we anticipate that listings, supply and demand will push market performance. The number of buyers looking at property should remain solid, supported by population growth and improving confidence.”

LJ Hooker has identified five trends for property in 2026:

1. Patchwork Price Rise

More affordable capital cities such as Perth, Adelaide and Brisbane are expected to continue to outperform Sydney and Melbourne as local supply and demand play a bigger role than interest rates.

Suburbs to watch: Ripley (QLD), Griffin (QLD), Petrie (QLD), Munno Para West (SA), Port Adelaide (SA), Alkimos (WA) and Ellenbrook (WA)

2. Sellers Come Out of Hibernation

After a long period of very low stock, more owners are expected to test the market in 2026. Extra listings should take some heat out of price growth, but with the underlying housing supply still tight, it is likely to remain a seller-friendly market in most areas.

Suburbs to watch: Leppington (NSW), Dulwich Hill (NSW), Winter Valley (VIC), Baringa (QLD), Petrie (QLD), Mount Barker (SA), Sorell (TAS), Zuccoili (NT), Rosebery (NT), Giralang (ACT) and Denman Prospect (ACT).

3. Value Not Postcode

Affordability is pushing more buyers to chase value rather than focus on a single postcode, shifting demand towards more affordable cities, outer suburbs and key regional hubs. This is likely to see townhouses, dual occupancy and mid-rise apartments increase in popularity.

Suburbs to watch for first homebuyers: Penrith (NSW), St Marys (NSW), Werribee (VIC), Sunshine West (VIC), Tarneit (VIC), Ripley (QLD), Munno Para West (SA), Ellenbrook (WA), Baldivis (WA) and Brighton (TAS)

4. Rental Squeeze, Building Freeze

Rents are expected to stay high in 2026 because the market is still not approving and building enough homes, especially medium and high-density projects. This is keeping vacancy rates low, supports rent growth and maintains investor interest.

Suburbs to watch: Parap (NT), Bonython (WA), Griffin (QLD), Bonython (ACT), and Port Adelaide (SA)

5. EV-ready beats NBN-ready

As more households buy electric vehicles and pay closer attention to power bills, buyers will be looking for homes with solar, batteries, charging stations and modern switchboards. Older properties that are expensive to run and with no green features will be seen as dated.

Mr Tiller is predicting a steady market that will keep investors active in 2026 while also encouraging more first-home buyers and upgrades to move when the right property comes up for sale.

“It is shaping up as a year of adjustment rather than a boom or a bust, with the market balancing out slowly rather than sharply,” Mr Tiller said.

“This is good news for sellers and buyers; there will be both motivation and reassurance to make a move in the coming year, and this should keep increasing turnover.”