Introduction

The Australian housing market is set for continued growth, with ANZ forecasting a 2.7% increase in capital city housing prices in 2025, followed by a further 4.1% rise in 2026. This upward trend is driven by strong population growth and supply shortages, which continue to shape the real estate landscape.

In this article, we examine ANZ’s housing price predictions, the key factors influencing these trends, and what homebuyers, investors, and sellers should expect in the coming years.

ANZ’s Housing Price Growth Forecast

1. Expected Market Growth in 2025 and 2026

According to ANZ’s projections:

  • 2025: Capital city housing prices are expected to increase by 2.7%.
  • 2026: Prices are forecasted to grow at a faster rate of 4.1%.

These figures indicate sustained demand for housing, despite broader economic uncertainties. The compounding impact of supply constraints and population growth is expected to keep pushing prices upward.

2. How Population Growth Affects Housing Demand

Australia’s population is expanding at one of the fastest rates in recent years, particularly in major capital cities. This growth is fueled by:

  • High levels of immigration to support economic activity.
  • Urban expansion and infrastructure developments attracting new residents.
  • Increased demand for rental properties, putting further pressure on home prices.

With more people entering the housing market, competition for available properties is expected to intensify.

3. Supply Shortages Contributing to Price Growth

One of the biggest drivers of rising property prices is the ongoing housing supply shortage. Factors limiting housing availability include:

  • Delays in new housing developments due to construction costs and material shortages.
  • Zoning restrictions and regulatory hurdles, slowing the speed of new builds.
  • A lack of affordable housing options, forcing more buyers into a competitive market.

This imbalance between supply and demand is keeping prices elevated, with fewer properties available for purchase.

Implications for Buyers, Sellers, and Investors

For Homebuyers

  • Expect increased competition, especially in capital cities.
  • Consider acting sooner to avoid future price hikes.
  • Explore government incentives and mortgage options to maximize affordability.

For Property Investors

  • A growing population and limited housing supply make rental properties attractive.
  • High rental demand could lead to increased rental yields.
  • Areas with infrastructure expansion may present strong long-term investment opportunities.

For Home Sellers

  • Price growth could lead to higher selling prices in 2025 and 2026.
  • Strategic timing of sales could maximize returns, especially if supply remains constrained.
  • Strong demand for well-located properties could result in faster sales at premium prices.

Future Market Trends and Considerations

1. Interest Rate Adjustments

The Reserve Bank of Australia (RBA) will play a key role in market conditions. Any interest rate cuts in 2025 could:

  • Increase borrowing power for buyers.
  • Boost demand, further driving price growth.
  • Make refinancing a more attractive option for homeowners.

2. Housing Affordability Challenges

While prices are expected to grow, affordability remains a concern. Governments and policymakers may need to introduce measures to improve access to homeownership, such as:

  • Expanding first-home buyer grants.
  • Increasing investment in affordable housing.
  • Encouraging faster housing development through zoning reforms.

3. Regional Growth vs. Capital City Performance

While capital cities are predicted to see strong price appreciation, regional markets may experience more moderate growth as affordability pressures push buyers to outer areas.

Conclusion

ANZ’s forecast of 2.7% housing price growth in 2025 and 4.1% in 2026 highlights the continued strength of the Australian property market. With population growth and supply shortages driving prices upward, homebuyers, investors, and sellers need to stay informed and adapt their strategies accordingly.

Whether you’re looking to buy, sell, or invest, understanding market trends and acting strategically will be key to navigating the evolving housing landscape. What are your thoughts on ANZ’s housing price forecast? Share your views in the comments below!