Australia's Two-Speed Property Market: Perth & Brisbane Lead While Sydney & Melbourne Stall

Overview

Australia's property market in 2026 has split into two distinct speeds. Mid-sized capitals — particularly Perth and Brisbane — are delivering strong double-digit price growth, while Sydney and Melbourne face affordability ceilings that are constraining performance.

The Numbers

According to KPMG's 2026 forecast, the expected house price growth by capital city is:

• Perth: 12.8%
• Brisbane: 10.9%
• Darwin: 10.5%
• Adelaide: Strong growth continuing
• Sydney: 5.8% (moderate)
• Melbourne: 6.8%

The national median dwelling value reached approximately $923,000 by late February 2026, up nearly 10% year-on-year. The national capital city median house price rose 0.9% in the March 2026 quarter alone, reaching approximately $1.3 million.

Why Perth and Brisbane Are Outperforming

Several structural factors are driving the mid-sized capitals:

• Affordability advantage: Median prices in Perth and Brisbane are significantly below Sydney and Melbourne, attracting both locals and interstate migrants
• Population growth: Strong interstate and overseas migration to Queensland and Western Australia
• Economic fundamentals: Resources sector (WA) and infrastructure investment (QLD, including Olympic-related projects) support employment and confidence
• Supply constraints: New housing construction has not kept pace with demand in these markets

Perth has posted monthly growth of approximately 2.3%, with Brisbane at 1.6% — rates far above the national average.

Why Sydney and Melbourne Are Subdued

Sydney and Melbourne face a different set of challenges:

• Affordability ceiling: Price levels have moved beyond what current borrowing power and household incomes can support for many buyers
• Higher price sensitivity to rates: More expensive mortgages mean rate changes have a proportionally larger impact
• Investor caution: Higher holding costs in expensive markets have reduced investor appetite
• Flat to negative monthly growth: Both Sydney and Melbourne recorded flat or slightly negative monthly growth in early 2026

What This Means for Buyers and Investors

If You're Buying in Perth or Brisbane

• Expect continued competition and potential for further price increases
• Move quickly on properties within your budget
• Factor in that rapid growth may slow as affordability limits are eventually reached

If You're Buying in Sydney or Melbourne

• More negotiating power as a buyer in a softer market
• Opportunities in specific suburbs may offer better value than headline figures suggest
• Consider the long-term fundamentals — supply constraints will eventually support prices

For Investors

• Rental yields in mid-sized capitals are generally more attractive than in Sydney and Melbourne
• Capital growth prospects favour Perth and Brisbane in the near term
• Use our Investment Property Yield Calculator to model returns by location

Use our Stamp Duty Calculator to compare upfront costs across states, and our Buy vs Rent Calculator to model the purchase decision for your target market.

Compare states: State Comparison | Model your investment: Yield Calculator.

Sources: KPMG Australian Housing Market Outlook 2026, CoreLogic Home Value Index, Domain Property Price Forecasts.