Home buyers are being pushed out to the regions as falling interest rates and a lack of supply put a rocket under inner-city house prices.

The median house price in Sydney is set to approach the dizzying $2 million barrier in 2026, according to forecasts released by property sales portal Domain on Thursday.

House prices across the capital cities are expected to grow by six per cent in 2026.

That is on top of the nine per cent growth forecast for 2025, as three Reserve Bank interest rate cuts and stronger income growth boost demand.

"We've seen momentum building across our housing markets, and particularly in our largest markets Sydney and Melbourne," Domain chief economist Nicola Powell told AAP.

"We're expecting that momentum to continue to build in the first half of 2026."

After fa

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