As we wrote at the end of 2025, we think Sydney’s property market is now back in a phase we’d describe as “normal”.
So is “normal” also what we can expect in 2026?
When we say that, we don’t believe “normal” is a bad thing – far from it. A normal property market is a healthy market to buy and sell in – it presents great opportunities without the frenetic pace and fear of missing out characterised by a rising market.
So a return to normal is actually great news for buyers of all types – including first home buyers, but also people looking to upsize or downsize (who won’t be as rapidly priced out of the next step).
2025: The predictions vs reality
Before we reveal what the experts forecast for 2026, we thought we’d see how accurate they were for the year just gone.
The property market ended 2025 in a strong position. Cotality’s annual “Best of the Best” Report revealed national annual growth in dwelling prices of 7.7% – well above the 20-year average of 5.1% growth. Sydney’s median home value increased 5.1% over the 12 months to November, to reach $1,269,659.
Here’s what the experts believed would happen at the start of last year, as we reported in our first article for 2025.
“CoreLogic expects continued “diversity” in the housing market over 2025. Domain forecasts both apartment and house prices will increase 4% to 6% in Sydney, while realestate.com.au predicts more modest growth of 1% to 4%. When it comes to the big four banks, NAB, Westpac, CBA and ANZ all expect home values across the capital cities to increase by 3% to 6% next year.”
So most experts’ forecasts were reasonably close to what actually unfolded.
What do the experts forecast for Sydney’s property market in 2026?
SQM Research forecasts a modest 2-3% gain across the city over 2026. It believes price growth will be concentrated in Western Sydney, where prices will rise by between 5-8% – driven by the area’s rising connectivity and the new airport.
Domain takes a slightly different view and argues that Sydney’s median house price will rise by 7%, taking it almost to $2 million – a price point it describes as “an out-of-reach milestone for many aspiring buyers”. Domain argues this growth will be “driven by lower interest rates, rising household incomes and a wave of first-home buyer demand under the expanded First Home Guarantee Scheme”.
However, while Domain believes downsizers will benefit from the 2026 property market, upsizers will face challenges. It also cautions that the price surge will taper off in late-2026 as new housing supply finally hits the market and affordability limits are reached.
The Big Four banks all forecast decent rises. CBA believes we’ll see an average of 5.4% growth across capital cities,while ANZ says 5.8% and NAB believes it will be 6%.
Meanwhile, Westpac forecasts a 5% rise for Sydney dwelling prices over 2026.
The east will continue to perform well
Sydney’s east has been one of Australia’s best performing areas for property over the past three decades. In fact, no fewer than three suburbs in our area – Bronte, Clovelly and Bellevue Hill – made it into realestate.com.au’s top 10 best performing suburbs over the last 30 years.
The same trends that have driven rising prices in these suburbs should continue through 2026.
First, the strength of blue-chip, prestige suburbs and the luxury market overall. Bellevue Hill is the city’s most expensive suburb, with some of the most coveted trophy homes. Despite – or maybe because of – this, it continues to show some of the strongest growth. This is backed up by separate data from Domain, which shows blue chip suburbs like Paddington, Surry Hills and Randwick made it into the top 10 most searched suburbs in the country.
Second, the insatiable demand for property on the eastern beaches. Clovelly and Bronte have been star performers, and we have sold some excellent property in both suburbs for record prices over the last couple of years.
Last year Domain reported that the Eastern Suburbs led the city for price growth over winter. We believe the same fundamentals are there for the eastern suburbs to continue to outperform the city in 2026.
What else will impact the eastern suburbs property market in 2026?
Policy. Data shows that first home buyers are out and about in greater numbers thanks to the revised 5% deposit Home Buyer Scheme. At the end of 2025, the Help to Buy scheme launched too, bringing more opportunities but also greater competition to the entry level market and inevitably pushing prices higher.
Interest rates. While other banks are more circumspect, both CBA and NAB are expecting interest rate hikes early in the new year, which have the potential to deter some buyers or restrict their budgets.
Cash buyers. Our area has a large number of cash buyers, and we don’t expect this to change in 2026. Many cash buyers are downsizers, who have sold the family home and are moving for lifestyle reasons. They are not impacted by interest rates, grants or even typical things that guide market sentiment and make up 40-60% of the buyers in some suburbs in Sydney’s east.
Market sentiment. Market sentiment will play a role in what unfolds next year and it is notoriously difficult to predict, and easy to be impacted by unexpected events. Over 2025, the Westpac–Melbourne Institute Consumer Confidence Index registered its highest levels since 2022 – revealing optimism about the economy which is a good sign for 2026.
Supply. Switzer reports that national listings are 18% below the five-year average. Coupled with low housing completions this continues to promote strong market conditions.
Affordability. When we talk about affordability we’re not just highlighting rapid price rises and the potential for mortgage or rental stress. By mid-2025, there was a 45% gap (equivalent to $692,000) between Sydney’s median house and apartment prices according to PropTrack – the largest it had ever been – which brings obvious changes to the market and what people can afford.
Sellers: Pricing matters more than ever
While prices are still rising here in Sydney’s East, the increases are less steep and dramatic than previous years. It’s a steadier style of growth. But if a property is well-priced, marketed effectively and presented well it will attract strong demand.
But we would caution sellers against having expectations that aren’t aligned with the market.
If your property needs work or is priced too high, it could linger on the market. If that happens you may eventually be forced to take an offer below what could have been achieved if price had been better managed.
Buyers: It may be wise to buy early
The fact that more growth is expected is not good news for everyone. Homeowners will benefit from increased equity, but those who are renting or don’t yet own property may face challenges. Similarly, if prices rise across the board, anyone looking to upsize may find the gap between the property they’re selling and the one they’re buying increases.
It’s also worth remembering that when the market does take off, it takes off fast – not least because the purchasing process is becoming more compressed. The View.com.au Path to Purchase 2025 report shows buyers now go from considering a purchase to buying a property in 20.6 months. That’s nine months shorter than just five years ago.
So, if you’re looking to move in 2026, our advice is to get in early before prices rise even more.
Want more?
If you’re considering buying or selling in Sydney’s East, contact my team for expert guidance.
