Why are Australian house prices projected to fall in 2026 according to KPMG?

KPMG projects Australian national house prices will drop 1.1% in late 2026 due to higher interest rates, affordability pressures, and weaker investor sentiment. The firm stated these factors are actively dampening buyer demand.

How will major capital city property markets perform according to KPMG?

KPMG forecasts Sydney and Melbourne house prices will fall 4.4% and 5% respectively over late 2026. In contrast, Darwin is projected to be the strongest performing capital city market with an 8.1% price increase.

What is the 2026 rental market outlook according to KPMG?

KPMG expects national rental growth to stay elevated at 3.7% through the remainder of 2026. The firm noted that persistent low vacancy rates and supply constraints continue to push rental costs higher.

When does KPMG expect Australian property prices to recover?

KPMG forecasts property prices will rebound 3.4% in 2027 following the late 2026 downturn. The firm expects the housing market to follow a V-shaped trajectory over the next two years.

What structural factors are impacting the market according to KPMG?

KPMG identified an ongoing housing shortage driven by steady population growth and construction lagging behind demand. The firm stated these underlying fundamentals will support the broader market despite short-term cyclical pressures.

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KPMG forecasts Australian house prices dropping 1.1%

Written by Isaac FrancisPublished Aug 4, 2026, 4:15 AM

Australia's national house prices are projected to drop 1.1% over late 2026, according to KPMG.
Sydney and Melbourne prices are forecast to decline, while Darwin is projected to increase by 8.1%.
Higher interest rates and supply shortages are driving an anticipated V-shaped recovery in 2027.

Professional services firm KPMG stated that Australian national house prices are projected to fall 1.1% in late 2026.

KPMG forecasts Sydney and Melbourne prices will drop 4.4% and 5%, contrasting with an 8.1% gain in Darwin.

"As a result, we expect the housing market to follow a V-shaped trajectory over the next two years," said KPMG Chief Economist Brendan Rynne.

KPMG expects national rental growth to remain elevated at 3.7% in 2026 due to persistent low vacancy rates.

KPMG forecasts property prices to rebound 3.4% in 2027, and following the report, the KPMG share price was unchanged as a private partnership.

Australia continues to face an ongoing housing shortage driven by strong population growth and constrained supply.

Higher interest rates and reduced investor sentiment remain key factors weighing on buyer demand nationwide.