KPMG’s latest property forecast predicts a steady rise in real estate prices, with house and unit values set to climb through 2025 and 2026. While many expect a downturn, KPMG forecasts a significant market upswing, especially in key cities like Sydney and Melbourne. If you're an investor or homebuyer, now is the time to strategise. Learn how these trends could shape your next property move.
Every year, KPMG releases its forecasts for the Australian property market, outlining expected price movements and trends. Their latest property market forecast reveals unexpected trends. While growth is expected in 2025, the real surprise is 2026—contrary to widespread predictions of a downturn, KPMG anticipates a significant upswing. Here’s what this means for you.
As the new year unfolds, KPMG’s analysis confirms that the housing market has largely aligned with their previous forecasts. In their earlier report, they predicted that in 2024, there would be:
The actual figures came close, with houses growing by 5.1% and units exactly at 4.5%.
Looking ahead, KPMG now forecasts house prices to grow by:
Unit prices, on the other hand, are expected to outpace houses, rising by:
This means that if you’re considering entering the property market, you need to think beyond just the short-term gains and plan for long-term growth.
You might be tempted to jump on the unit bandwagon, given the projected stronger growth. However, it’s important that you don’t make decisions based purely on high-level forecasts. While units may provide a more affordable entry point, their performance will vary significantly based on location, demand, and supply.
If you plan to invest in property, you need to think in five-year cycles. Some areas have seen tremendous growth, allowing investors to flip properties for substantial profits. But are you the type of investor who buys and sells quickly, or do you prefer to buy and hold? If you’re in it for the long haul, then purchasing quality assets at the right price should be your priority.
Many investors fall into the trap of overpaying, which erodes their potential gains. Buying a property that is already overpriced by $30,000 can set you back, even in a rising market. That’s why you should focus on securing properties below market value and in high-demand locations.
KPMG’s report highlights varying growth rates across different cities. While price appreciation is expected to be moderate in 2025, a stronger upswing is forecasted for 2026.
One of the key factors influencing KPMG’s forecast is interest rates. Lower interest rates tend to drive up demand, particularly in expensive markets like Sydney and Melbourne. If rate cuts occur in 2025, their full impact will likely be felt in 2026, further fueling price growth.
For unit investors, the market shift is also noteworthy. In 2025, Sydney and Perth are expected to lead unit price growth at 5%. In 2026, Melbourne takes the top spot with an anticipated 7.1% increase, followed by Sydney at 6.1%.
To put this into perspective, if you purchase a $500,000 property and it grows by 4% in 2025, that’s a $20,000 equity increase. If it then grows by 5% in 2026, your property would be worth $550,000 within two years—an increase of $50,000. Achieving this level of return through salary alone would require earning an additional $80,000 per year. This highlights real estate’s power as a wealth-building tool, offering leverage to maximize returns.
While property prices are expected to rise, the rental market is also undergoing a shift. Rent growth has started to slow, but that doesn’t mean rents are declining—only that their pace of increase has moderated. KPMG projects rental price growth to settle between 3.5% and 4.5% annually over the next two years, reflecting stabilising vacancy rates and a more balanced supply-demand dynamic.
If you’re serious about property investing, you need to think strategically. The best investors don’t just buy their next property—they plan for their next five moves. Real estate is a business, and to succeed, you must approach it with the same level of planning and foresight.
If you want expert guidance and a team behind you, consider working with professionals who can help you understand the market efficiently. Book a FREE discovery call with Search Property to explore your options.
For the full breakdown of this blog, you can watch our YouTube video here.
Stay ahead, stay informed, and make smart property moves. The next two years could set you up for long-term success in the Australian property market.
Disclaimer: Search Property Pty Ltd (SP) does not provide financial or investment advice and does not hold a financial services license as defined in the Corporations Act 2001 (Cth). Any advice given by SP is general in nature and does not take into account your personal circumstances or objectives, financial situation or needs.
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