National home prices hit fresh highs as mid-sized capitals drive fastest gains since 2023

The Perth property juggernaut continued its massive surge in November, leading the nation in a month where only Sydney and Melbourne dwelling values were below 1 per cent.

The Western Australian capital’s 2.4 per cent growth in a single month was driven by chronically low listings failing to meet hot demand.

Tim Lawless, Research Director, Cotality, noted that growth in home values across the mid-sized capitals is once again diverging from the larger cities - a similar trend to the one seen in late 2023 and 2024.

“The skew towards the mid-sized capitals is especially evident in Perth, where listings are holding more than 40 per cent below average, buyer demand is elevated and the 2.4 per cent monthly rise in dwelling values has added just over $21,000 to the median in November, roughly $5,000 per week.”

So, can anything slow the national gain in property prices?

Mr Lawless said that with the engine room of the market primarily being the more affordable segment, eventually a lack of affordability would weigh on buyer sentiment.

“Over the past three months, most of the state capitals have seen values across the lower quartile of the market rising the fastest.

“Melbourne, where housing affordability isn’t quite as stretched, is the one exception, with the city’s broad middle of the market is seeing the fastest lift in values.

“With housing affordability already stretched and worsening, it stands to reason that fewer borrowers will be able to access credit as serviceability barriers become more prominent.”

Inflation heading upwards again would also bring some interest rate pressure to bear as the RBA shied away from rate cuts that only a few months ago seemed certain.

The impacts of the recent policy announcement from APRA to limit high debt-to-income (DTI) ratio loans to 20 per cent of new lending were expected to be limited.

Matt Bell, Chief Economist at Oliver Hume, said that combined with the changing interest rate outlook of the last few months, there should some stabilisation or easing in the monthly rates of dwelling price growth, rather than the consistent increases seen so far this year.

“The main story of the last three months is the strongest quarter of growth since July 2023 and the annual rate increasing from 4.1 per cent to 7.5 per cent.

“Even more dramatic is the gulf between Sydney and Melbourne, with lower and falling monthly rates of growth, and all the other capitals, with rising monthly growth rates above 1.0 per cent.

“Because new housing supply depends heavily on the gap between established home prices and new house-and-land prices, Melbourne’s weaker established market means its land prices will take longer to rise.

“In contrast, Perth, South East Queensland, and Adelaide are already rising strongly on the back of very strong established markets.

“Auction clearance rates in the two largest auction markets in the country (Sydney and Melbourne) are clearly showing signs of easing and now sit just below long term averages,” Mr Bell said.

Rents rising

Data also released on 1 December by PropTrack found that national property prices were at record highs, albeit on the back of monthly growth of 0.5 per cent.

Eleanor Creagh, REA Group Senior Economist, said national home prices are now 8.7 per cent higher than a year ago, the fastest annual growth since mid-2022.

“Momentum has firmed throughout 2025, but stretched affordability means growth remains well below the 20-30 per cent annual gains seen in past booms.

“Lower interest rates, increased borrowing capacities, and a recovery in sentiment have underpinned this year’s reacceleration.”

Ms Creagh said Darwin, Hobart, Melbourne, Canberra and Sydney have recorded a strengthening in annual growth compared with late 2024. Meanwhile, Brisbane, Adelaide and Perth continue to record strong price rises, but growth is no longer accelerating relative to this time last year.

“In each of these capitals, unit growth is outperforming houses both quarterly and annually as buyers pivot toward more attainable options.

“Population inflows, a lift in investor activity, and the expanded Home Guarantee Scheme have reinforced demand, alongside this year’s series of interest rate cuts.

“At the same time, total stock on market has been tight, and the delivery of new housing remains constrained, tilting conditions toward sellers.

“These factors point to further price gains through summer, however, monthly growth eased across the capitals from October’s stronger pace, and with interest rates now expected to remain on hold for an extended period, affordability constraints are likely to see price growth moderate throughout 2026.”

Both Cotality and PropTrack found that regional property markets were narrowly eclipsing the capitals.

According to PropTrack, regional growth has outpaced the capitals over the past year (9.3 per cent vs 8.5 per cent) and five years (64 per cent vs 47 per cent), supported by relative affordability and lifestyle appeal.

Renters aiming to get on the property ladder are faced with the double whammy of high property prices and having to meet high rental costs.

Nationally, the past four months have seen rental vacancy rates holding close to record lows at just 1.5 per cent, down from 1.9 per cent a year ago.

With vacancy rates remaining low, rents are continuing to rise. The national rental index rose half a per cent in November to be 5.0 per cent higher over the past 12 months, the highest annual pace of rental growth since the same time last year.

Brisbane real estate in for volatile 2026

Speaking about the Brisbane property market, Lisa Evans, a property buyer for Vervé Property, said that with such little stock hitting the market, in 2026 prices will remain “dangerously unstable”.

“For the first time in as long as she can remember, next year we can expect a market driven by human behaviour and emotions, rather than policy or interest rates.

“Serious buyers will be willing to pay premiums for speed and certainty; some homes like those with adaptable layouts for dual living are likely to attract bidding wars.”

Keeping listings low was what she described as paralysis.

“Everyone knows we are experiencing a property supply issue like never before.

“Homeowners are overwhelmed with ads and outreach from agents trying to encourage them to put their home on the market,” Ms Evans said.

“But homeowners are struck by paralysis: they’re afraid of being displaced.

“They are also afraid of being priced out of the market, being met by more competition, and the lack of property options if they do sell and achieve an incredible price.

“Stamp duty and moving costs are amplifying the fear.”