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Another boom year for Australia’s smaller states
Small market states are tipped for a strong 2026, with the majority of property professionals forecasting that some could see another year of more than 5 per cent growth.
According to the latest Cotality data from its Decoding 2026 report, confidence in the nation’s housing market remains high, though sentiment varies by state.
The data found that 87 per cent of agents and financial professionals expected dwelling values to rise in 2026, with only 3.5 per cent anticipating a drop.
Cotality Australia research director Tim Lawless said housing momentum began to slow at the back end of 2025, following a year of significant growth.
“Housing conditions were strong through most of 2025, which explains the broadly positive sentiment,” Lawless said.
“However, national averages distort the variation of performances and market conditions at a local level, and it’s those differences that are becoming more important as affordability and policy settings diverge.”
The data found that the smaller states, such as Queensland, South Australia (SA), and Western Australia (WA), held the highest level of confidence in their continued strength in 2026.
Around nine in 10 survey respondents in Queensland and WA anticipated prices would continue to rise, while around half believed growth would exceed 5 per cent.
Lawless said that while the data showed that confidence in the SA market, currently at 85 per cent, likely stemmed from its relative affordability, other economic conditions also supported the high sentiment.
“Strong internal migration, tighter rental markets and a persistent shortage in housing have combined to support all three of these markets.”
“Those fundamentals remain largely intact, but it’s not surprising to see Queensland and Western Australia agents optimistic about price growth given their respective fundamentals and economic prospects.”
While sentiment in NSW remains positive for 2026, with 86 per cent of survey responders forecasting growth, Lawless said growth would be more conditional due to already high dwelling values and stretched serviceability.
Victoria recorded the lowest growth expectations in the survey, with just 84 per cent anticipating a rise in values in 2026.
Lawless said high property taxes, dampened investor participation and reduced population inflows were clear indicators of why predictions were less bullish around the Victorian market.
“Victoria stands out for the scale of investor selling, policy settings and higher holding costs, all of which have weighed on activity.”
While the majority of the sentiment was positive for 2026, Lawless said uneven regional dynamics and interest rate uncertainty were likely to cause some hesitation in the market.
“The market is entering 2026 from a position of strength; however, there is a cloud of uncertainty around inflation and interest rate settings, as well as affordability challenges, all of which are likely to weigh on housing confidence.”
“However, given we aren’t likely to see a material supply response in 2026 either, this should help to offset any downside risk to home values trending substantially lower,” Lawless concluded.