Is 2026 the peak of Australia's housing cycle? Or is there not really one cycle at all?
Digging onto the data with an eye to historical trends
Happy Australia Day 2026!
There is nothing more patriotic I could write about today than home prices, so enjoy this deep dive.
What makes 2026 an interesting year is how it fits with a commonly held view about the existence of regular 18-year cycles in property markets. It is now 18 years since the 2008 crisis, so 2026 should see the next big one (market price correction).
Right?
Well, I’m not so sure.
To provide some context for what follows, here are some facts about the housing market in Australia and globally over the past decade.
Much of the global increase in rents and prices since COVID merely reflects overall inflation. Inflation has also increased household incomes (unevenly). For example, Australian inflation from 2021 to 2025 was about 20%. PropTrack’s all dwellings national index is up about 23% over the same period.
Australia had a unique post-financial-crisis surge in apartment prices and development during the 2010s, predominantly in Sydney (which saw apartment prices rise 60% nominally from 2010 to 2016). Yet Brisbane apartment prices were up only 5% nominally in the same period.
Since then, in inflation-adjusted (real) terms, Sydney apartment prices have fallen 10%. Looking abroad, places like Tokyo, which are widely thought to have town planning systems that prevent rising dwelling prices, have seen apartment prices rise 60% in real terms since 2016.Australian cities have seen asynchronous boom and bust cycles, but this is also the case when comparing Australia to global peers like Canada and New Zealand. Canada as a whole (though also with different patterns in each city) saw prices relatively flat from before the 2008 financial crisis, right up until 2015. Then, a price cycle emerged, which had a pause for a couple of years before COVID, only to resurge again spectacularly.
This is a similar story to New Zealand.
Now, both of these countries have seen national price declines for multiple years, particularly in real terms, despite falling interest rates. Will they see a 2026 crash even after two or three years of falling prices?
This context is important.
Too often, we get caught up in the idea of One Big Property Cycle and when the next big crash will hit the market. But in reality, every city and national market is constantly adjusting to overall macroeconomic and financial conditions at varying rates.
Had you delayed buying an apartment in Sydney in 2010 because the One Big Property Cycle theory said you had another fourteen years to make your money on the upswing, you would have missed out on all of the 60% nominal capital gains in the upswing, which happened before 2016. Had you bought in 2016 to capitalise on the second part of the cycle, you would have seen no capital gains.
But had you avoided buying an apartment in Brisbane in 2010, it would have saved you the costly carrying costs during nearly a decade with no capital gains. Only in 2021 did apartment prices in Brisbane exceed their 2010 prices.
Rather than property being at the heart of the cycle, causing regular 18-year synchronised booms and busts, it might be better to imagine that there are slow-moving overall macroeconomic and financial cycles, and that property markets respond to these conditions in different cities and countries at different rates, sometimes overshooting in both directions.
Within this view, different cities and countries should never be able to independently deviate too far in terms of their relative property pricing for too long—the repricing process keeps relative prices between cities and towns, houses and units, and between macroeconomically comparable countries, within a moderate range.
When cities in Canada and New Zealand experience significant price corrections, we should be mindful that Australian housing prices are becoming relatively more expensive.
Today, I dig deeper into the relative pricing of housing assets across Australia at the start of 2026 along three dimensions.
The price of apartments compared to detached homes.
The price of major cities relative to each other.
The rental returns on housing relative to the returns on other investments.
These price relativities can help us understand which direction the housing market in different cities might take, providing a much more nuanced view than simply counting 18-years and applying this logic to all property types in all cities.
While some people like to look at intermediate market measures like vacancy rates or months of inventory, it is actually relative pricing that really matters. These intermediate market activity metrics only tell us that prices or rents are adjusting in a certain direction—but these adjustments only happen because of relative pricing disparities.
Let’s proceed.
Apartments versus detached houses
One unique characteristic of the housing market has been the change in preferences for detached housing since COVID. The chart below shows the change in the ratio of house prices to apartment prices nationally since 2010. While home prices increased by 10% points more than apartments in the decade prior to 2020, they increased another 20% points more in the few years after.
