Workers construct scaffolding, as a new home is built, in the seaside suburb of Greenhills Beach in Sydney, Australia May 25, 2017. REUTERS/Jason Reed

BENGALURU (Reuters) -Australian home prices will rise more than previously expected in 2026, thanks to tight supply and resilient demand, according to a Reuters poll of analysts who said a lack of entry-level homes is still among the biggest barriers for first-time buyers.

House prices rose around 40% during the COVID-19 pandemic but fell about 9% when the Reserve Bank of Australia hiked interest rates to combat high inflation.

The central bank's 75 basis points of rate cuts in 2025 have reignited buyer interest, however, pushing the national median home price to a record high of A$872,538 in October.

But with interest rates expected to stay at an over two-year low of 3.60% in the near term, analysts predict national home prices will continue to outrun the country's inflation rate.

The November 13–26 survey of 15 property analysts showed national home prices rising around 8% this year and 6.9% in 2026, up from 5.0% and 5.6% in the previous poll - the largest upgrade this year.

Home prices in Sydney, Melbourne, Adelaide, Brisbane and Perth will rise between 5% and 7% next year.

"It's a resumption of consumer confidence with the interest rate fall, which then leads to a sense of fear of missing out," said Michael Yardney, founder of Metropole, a real estate advisory firm.

"We still haven't got enough properties for all the immigrants and the first-time buyers, so I see strong price growth, especially in the first six months of 2026. Then maybe things will slow a little bit in the second half."

Only two of 11 analysts who answered a separate question expected purchasing affordability for first-time buyers to improve over the coming year.

While existing homeowners reap most of the benefits of rising property values, first-time buyers are being squeezed by a dearth of listings, weak wage growth and tighter borrowing limits.

MEDIAN HOME VALUE

In Australia, the median value of a home is now nearly eight times annual income, and about two-thirds of households own property.

Most respondents cited a shortage of entry-level homes, followed by difficulty saving for a deposit as the most severe barriers for first-time buyers.

"High rents, cost-of-living pressures, and only moderate wage growth will continue to make deposit saving difficult," said Mark Dawson, director at Urbis.

"While elevated construction costs, labour constraints, and longer delivery time frames mean the supply of genuinely entry-level dwellings is unlikely to increase materially in such a short period."

A federal scheme allowing first-time buyers to purchase with a 5% deposit has eased pressure, but analysts warned it risks inflating demand without addressing the underlying shortage of homes.

Meanwhile, the government has pledged to build 1.2 million new homes by 2030.

"To see the 1.2 million homes over the next five years is impossible. It's definitely good to set a target, but we find ourselves in a situation where perhaps even 1.2 million is not going to be enough to meet growth and demand," said Maurice Tapang, senior economist at Housing Industry Association.

(Other stories from the Q4 global Reuters housing poll)

(Reporting by Devayani Sathyan; Polling by Pranoy Krishna; Editing by Hari Kishan and Ed Osmond)