A shock forecast warns Brisbane house prices will rise 20 per cent by the end of next year, as experts say a ‘perfect storm’ is seeing buyers here willing to pay more than fundamentals justify.
Economists and valuers warn Brisbane’s runaway property market is defying affordability constraints that should have cooled demand months ago, with a KPMG report out Wednesday predicting house prices will jump 10.9 per cent in 2026 – dwarfing Sydney’s 5.8 per cent – and units to rise 7.8 per cent. This is to be followed by a further 9 per cent rise in 2027.
The forecast follows a 14.6 per cent jump in Brisbane’s median home price last year, with prices rising $135,900 to break through $1 million, PropTrack data shows.
KPMG chief economist Dr Brendan Rynne said prices were running ahead of fundamentals due to fear of missing out and the Albanese Government’s expanded 5 per cent Deposit Scheme pulling demand forward.
“We’re observing prices running ahead of what underlying fundamentals would typically imply for Brisbane at this point in the cycle,” Dr Rynne said. “That means sentiment effects – renewed urgency, investor re-engagement, fear of missing out – and policy-driven demand have added an extra premium on top of the structural undersupply.”
The forecast represents a dramatic revision from KPMG’s previous prediction of 5.6 per cent house price growth and 3.3 per cent for units.
The Australian Property Institute backed the outlook, ranking Queensland at 8.3 out of 10 for market strength against a national reading of 7.1, with API chief economist Dr Sherman Chan describing a “perfect storm” of population growth outstripping supply while construction costs soar.
Construction costs were the top concern for 66.3 per cent of Queensland valuers API surveyed, followed by interest rates, population growth and dual supply shortages.
Dr Rynne said the demand supply imbalance was more acute in Brisbane than Sydney, with infrastructure investment linked to the 2032 Olympics having a sizeable impact on population inflows, investor interest and speculative activity.
But he warned interest rates posed a major risk, with a 50 basis point rise typically trimming Brisbane’s annual growth by a few percentage points.
Canstar.com.au data insights director Sally Tindall said that risk was building, with banks hiking 176 fixed rates in the past week.
“With last week’s unemployment rate of 4.1 per cent clearing the path for a rate hike, the (RBA) Board’s decision now hinges on Wednesday’s inflation figures,” Ms Tindall said.
Dr Rynne warned the 5 per cent Deposit Scheme was delivering only short-term benefits. “The scheme helps eligible FHBs avoid LMI, delivering tangible monetary savings. But it also raises demand in lower-priced segments, lifting prices and not addressing the structural supply constraint. Therefore affordability benefits aren’t lasting.”
Brisbane’s forecast trails only Perth at 12.8 per cent, while Melbourne is expected to see 6.8 per cent growth and Adelaide 8.2 per cent.
KPMG expects Brisbane’s growth to moderate to 8.9 per cent in 2027 as affordability tightens and supply gradually improves.
Originally Published in The Courier Mail by Sophie Foster. View article online HERE.