What the top 10 suburbs of 2025 reveal about Australia’s affordability crunch

National property prices continued their inexorable rise in 2025, almost tripling the rate of inflation as they were poised to rise by more than 8 per cent for the year.

It represented a dire outcome for those not already benefiting from property ownership, a situation exacerbated by rents that also kept rising.

In parts of Sydney, those rent hikes were epic in scale, including Kareela where prices soared by 17.8 per cent and Como and Oyster Bay, which were both above 16 per cent.

Cotality revealed that Darwin dominated the capital city top 10 list of suburbs where property prices accelerated fastest.

But dozens of suburbs clocked up gains of 25 per cent or more around the country when regional centres were included.

The scale of Australia’s real estate affordability crunch is put into perspective by the miniscule proportion of properties that can be bought by a household on the median income.

That earning of $118,000 a year stretches to just 15 per cent of all homes sold in the 2025 financial year.

It’s a stinging reinforcement of just how entrenched the housing crisis has become.

For low-income families among the lowest 30 per cent of earners, buying a home is effectively off the table. They could afford a mere 3 per cent of homes sold in the past year, according to PropTrack data.

An average-income Australian household would need to spend about a third of their income (32.7 per cent) on mortgage repayments to buy a median-priced home, a slight decline from its peak of 34.3 per cent in the June quarter of 2024

REA Group Senior Economist Angus Moore said affordability remains near record lows, with conditions particularly challenging in News South Wales and South Australia.

“Higher income growth, coupled with lower interest rates following the RBA’s cuts in February and May, eased borrowing costs and boosted borrowing capacity (but) affordability will remain challenged in the year ahead.”

And if the news for the likes of first home buyers wasn’t bad enough, it was the market segment they would hope to enter that outperformed the rest.

Top capital growth performers over the past year have been skewed toward lower-priced dwellings across Australia.

This is reflected in the Cotality Best of the Best results for 2025, where the top house market growth was in Kalbarri, up 40.2 per cent (in regional WA) with a median value of just $515,000. Similarly, the strongest unit growth was in Gray (in Darwin), with a median value of $344,000 and an annual uplift of 33.3 per cent.

Nationwide, the 25th percentile dwelling was $684,000, alongside a median of $892,000 and a 75th percentile dwelling value of $1,119,000.

If there was any dubious reprieve, it was the fact borrowers were able to borrow more to get a foot on the ladder. Borrowing capacity for households increased by an average of 9.8 per cent, enough to offset the increase in home prices between 2023/24 and 2024/25.

It now takes almost six years just to save for a deposit. An average-income household in Australia, saving 20 per cent of their income for a 20 per cent deposit on a median-priced home, would need to save for the equivalent of 5.8 years.

Being in mortgage stress is now the new normal.

An average-income Australian household would need to spend about a third of their income (32.7 per cent) on mortgage repayments to buy a median-priced home. Repayments above 30 per cent of income qualify as being in mortgage stress.

At the other end of the economic bell curve were the ultra-wealthy.

Sydney’s top-end suburbs sat in their own price bracket in 2025, widening the gap between premium enclaves and the rest of the country.

Point Piper led the national list with a median house value of $17.3 million and unit medians above $3.1 million, followed by long-established areas such as Bellevue Hill, Vaucluse, Tamarama and Rose Bay.

Cotality Australia Head of Research Eliza Owen said the resilience of premium Sydney markets was in sharp contrast to affordability pressures elsewhere.

“Affordability constraints were a defining feature of 2025, yet premium markets continued to operate on their own cycle.

“These suburbs are far less sensitive to borrowing costs and listing trends, which is why their performance often diverges from the broader market,” she said.

Mosman recorded the highest total value of house sales nationally at $1.58 billion across 229 transactions, underlining the scale of turnover even in a year of strained serviceability.

2026 property outlook

Market conditions are expected to be more restrained in 2026 as borrowing capacity, affordability and credit assessments place limitations on demand.

National listings remain 18 per cent below the five-year average and new housing completions continue to trail household formation, maintaining the structural imbalance that supported stronger conditions in 2025.

Ms Owen said that imbalance alone is not enough to drive the same level of growth next year.

“Supply remains tight, but the demand environment is shifting.

“Inflation forecasts have been revised higher, interest rate expectations have adjusted with them, and households are facing stricter borrowing assessments. Those factors can temper buyer activity even when stock levels are low,” she said.

“Lower value markets may still outperform because they carry less sensitivity to credit constraints, but overall growth is likely to be more measured compared with 2025.”