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In 2025 the Australian housing market continued an extended run of growth, with national dwelling values rising significantly year‑on‑year. Yet as we transition into 2026, early indicators point to a market that is still strong but more nuanced, with varied performance across regions, dwelling types, and segments of buyers and sellers. For property owners, investors, and Canberra buyers and sellers, understanding these subtleties will be key to navigating the year ahead.
According to recent PropTrack and Cotality data, national home prices rose markedly in 2025, with annual growth in the high single digits. Growth was driven by successive interest rate adjustments during the year, steady demand, and ongoing supply constraints that continue to characterise Australia’s housing landscape.
However, as the year closed out, monthly gains moderated, with some capitals — including Sydney and Melbourne — recording small declines in December and others levelling out. Canberra also saw a slight easing as broader market forces came into play.
The first half of 2025 saw several interest rate cuts designed to support economic momentum and buyer confidence. These cuts helped sustain upward pressure on prices earlier in the year, but higher inflation late in 2025 raised expectations of tighter monetary policy through early 2026.
This shifting interest rate sentiment has shaped buyer behaviour. Some buyers rushed decisions ahead of potential rate rises, while others adopted a more cautious approach, waiting for clarity on the Reserve Bank’s next moves. For Canberra, where affordability is a longer‑term constraint, these dynamics have tended to moderate activity rather than dramatically accelerate it.
One of the standout themes in 2025 was exceptionally high seller profitability. In many markets, sellers realised gains not seen in over two decades, a reflection of constrained supply and sustained buyer competition.
This situation underscores two related structural dynamics:
• A national housing stock shortage that continues to underpin demand.
• Ongoing buyer interest across owner‑occupiers, downsizers, and investors alike.
For owners in Canberra, these conditions translated into steady — if not sky‑high — capital gains, particularly for homes in well‑positioned suburbs close to employment hubs and amenities.
While much attention often falls on the big capitals, 2025 highlighted important regional divergences.
The Darwin housing market emerged as a high‑growth outlier, with prices expanding at nearly double the pace of most other cities. This surge was driven in part by interstate investors chasing strong rental yields, which, in many cases, has priced some first‑home buyers out of competition.
This kind of regional variation serves as a reminder that national averages can mask local realities. For Canberra market participants, understanding how local economic conditions, rental dynamics, and buyer sentiment interact will be crucial.
In Canberra, the 2025 performance was marked by modest but consistent gains. Independent data shows:
• Annual value growth that was positive but below the national average.
• A market that has stabilised after earlier volatility.
• Rental conditions that remained tight even as price momentum slowed.
Affordability constraints in the ACT continue to shape buyer behaviour. Canberra’s median dwelling values are comparatively high relative to incomes, and with supply still limited, many buyers have concentrated their searches into more affordable segments or nearby growth areas.
Looking ahead, forecasts suggest continued but restrained growth through 2026, with factors like interest rate expectations, public sector employment stability, and local supply trends playing influential roles.
As we move into 2026, several key themes are worth watching:
1. Interest Rates and Buyer Confidence
If inflation remains elevated, the RBA may hold rates steady or even raise them marginally, which could temper price growth — especially at the top end of the market. Borrowing costs remain a key determinant of buyer capacity and sentiment.
2. Supply and Demand Balance
Nationally, housing supply remains inadequate relative to demand. Even with planning reforms and delivery initiatives underway in states like NSW and Victoria, construction and approvals take time to influence market balance meaningfully.
3. Shifting Buyer Priorities
Affordability pressures are prompting some prospective buyers to explore alternate buyer pathways, including smaller footprint housing, secondary locations, and dual‑income buying strategies. Investors, meanwhile, are recalibrating strategies to target stability and long‑term yield rather than short‑term capital gains.
4. Local Market Nuances
For Canberra, public sector employment stability and ongoing urban development make the ACT a market defined by fundamentals rather than frenetic speculation. That doesn’t mean prices won’t increase — rather that growth may be steady, uneven, and shaped by local policy decisions.
The Australian property market enters 2026 with a nuanced profile — prices remain above long‑term trends, sellers have enjoyed strong returns, and regional performance varies widely. Canberra’s market, while not the fastest‑growing, remains resilient and grounded in underlying demand fundamentals.
For buyers and sellers alike, the key to success in 2026 will be informed decision‑making grounded in local conditions, structural trends, and realistic expectations.
As always, staying across timely data, local insights, and broader economic indicators will help you make smarter property decisions.
• Canberra Times – National home price hit a new record high in 2025
https://www.canberratimes.com.au/story/9145131/national-home-price-hit-a-new-record-high-in-2025
• realestate.com.au – PropTrack Home Price Index – December 2025
https://www.realestate.com.au/insights/proptrack-home-price-index-december-2025
• The Real Estate Conversation – Profitability in the Australian housing market hits 20-year high: Cotality
https://www.therealestateconversation.com.au/news/2025/12/18/profitability-australian-housing-market-hits-20-year-high-cotality/1766013633
• ABC News – NT property prices soar as rental yields lure interstate investors
https://www.abc.net.au/news/2025-12-20/nt-housing-market-growth-darwin-palmerston-house-prices-property/106163296
• Which Real Estate Agent – Canberra Market Update 2025
https://whichrealestateagent.com.au/property-market-update/canberra-act
Cover image credit: Ben Appleton – Photox
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