2025 REALITY IS ON FIRE
Feature presented by Mitchell Residential & Commercial a locally owned independant premium service agency. Marketing, Management, Special Projects, Advisors. mres@iinet.net.au ~ mres.com.au
Australia’s housing market staged a turnaround in 2025, defying intense affordability and cost of living pressures to deliver an above decade-average growth rate of 7.7% through the year-to-date.
Cotality’s annual Best of the Best report, a detailed nationwide breakdown of the suburbs that rose fastest, had the highest rent return or offered the most accessible entry points, identifies which markets led the year’s recovery.
National dwelling values are set to close 2025 at least 8% higher, a result Cotality Australia Head of Research Eliza Owen says highlights how quickly conditions shifted after a challenging start.
“Markets entered 2025 under considerable pressure. Affordability had hit a series high, serviceability was stretched and price growth had flattened out. What followed was an unexpectedly strong rebound as interest rate cuts, easing inflation and limited supply reignited competition,” Ms Owen said.
Three rate cuts, an expansion of the 5% Home Guarantee Deposit Scheme and persistently low listing volumes helped drive the recovery, with the housing market recording three consecutive months of growth of at least 1% by November and reaching a new high of $12 trillion.
Ms Owen said the turnaround was most visible across lower value markets and regions where buyers were able to respond quickly to more favourable credit conditions.
“Tight supply meant even modest demand created upward pressure on prices. Cheaper markets were had the most acceleration because they remained within reach for buyers navigating higher living costs,” she said.
Prestige Sydney remains Australia’s price leader
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.
Ms 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.
Lower value suburbs delivered the strongest gains
Western Australia dominated high house value growth in 2025, with Kalbarri increasing 40.2% to $515,378 followed by Rangeway (32.2%) and Lockyer (32.0%).
Similar trends emerged in the unit market, with strong results concentrated in Queensland’s mid-priced regions such as Cranbrook (up 29.3%) and Wilsonton (up 26.9%).
Ms Owen said the performance of these markets highlighted the role of affordability at a time of constrained borrowing power.
“Lower value areas offered buyers an opportunity to get into the market if they had the capacity to service a mortgage. Once interest rate cuts started to flow through, demand lifted quickly in those areas where prices had further room to grow,” she said.
“Investors were a particularly strong driver of demand in markets across WA and QLD, where the share of new mortgage lending to investors reached 38.3% and 41.1% respectively.”
Perth, Brisbane and Darwin lead capital-city upswing
Darwin posted the strongest rise among the capitals at 17.1% through the year-to-date, following a flat result in 2024, joined by Brisbane and Perth as Australia’s three top-performing capital cities.
The fastest growing capital-city suburb for houses was Mandogalup in Perth (up 33.0% to $944,609), alongside several outer Darwin suburbs where more moderate entry points below $600,000 supported stronger value growth.
The most affordable capital-city suburbs for houses were clustered around Greater Hobart, including Gagebrook, Herdsmans Cove and Bridgewater, all with medians under $450,000. Suburbs in Adelaide and Darwin provided some of the best value for unit buyers, with medians ranging from less than $250,000 in Hackham, Adelaide to $328,416 for Karama in Darwin.
Biggest gains and the steepest falls in Regional Australia
Strong upswings in WA and Queensland contrasted with declines in other regional pockets.
House values fell 11.6% in Millthorpe (NSW) and 10.5% in Tennant Creek (NT) while several unit markets recorded annual declines, including South Hedland (down 14.1%) and Mulwala (down 11.8%).
Ms Owen said these differences reflected the uneven backdrop of supply levels, migration flows and localised demand.
“Some regional areas are still benefiting from relative affordability and tight rental conditions. Others are adjusting to earlier periods of rapid growth or shifts in local economic activity,” she said.
Mining towns produced the highest yields
Rental demand remained firm across key resource corridors in regional WA and parts of regional Queensland, where constrained supply, strong employment bases and short-stay workforces contributed to some of the highest yields in the country.
Newman, in the Pilbara, delivered the strongest house yields at 12.6%, reflecting demand linked to iron ore operations, Kambalda East, near the Goldfields mining belt, followed at 12.2%, supported by nickel and gold activity.
Unit yields were even stronger, with South Hedland leading the country at 17.8%, while Newman recorded 14.3% and Pegs Creek recorded 13.2%, as apartment stock is limited and worker demand remains consistent.
Pegs Creek, located in Karratha, recorded a 23.5% increase in house rents over the year and Rockhampton City recorded a 21.1% jump in unit rents.
Constraints to shape 2026
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% 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.”
FIRST HOME BUYERS
First-homebuyers’ hopes of achieving the Great Australian Dream of property ownership are slipping further into the quagmire, with industry leaders predicting Perth’s median house price could hit the $1 million mark by the end of this year.
The $1m 2026 prediction has promoted calls for the Cook Government to do more to help first-homebuyers get into the Perth and WA property market, including more stamp-duty relief in the upcoming May State Budget.
Just seven years ago, the median house price in Perth was just under $500,000.
Now, according to Cotality’s latest figures, Perth’s median property value sits at $940,635 — the third highest in the country behind Sydney ($1.28m) and Brisbane ($1.036m).
Perth’s annual growth rate was 15.9 per cent in 2025, bumping up the median price of Perth housing by more than $100,000.
In the space of four months, Lachie Neale has gone from dual-premiership captain and Brownlow medallist to a man whose reputation and integrity is in question.
And although the rate of growth is expected to slow in 2026, it is conceivable that by this time next year, Perth’s median house price will top $1m, with predictions house values could increase by about 10 per cent or more.
Cotality research director Tim Lawless and REIWA president Suzanne Brown as well as leading financial and political commentator Sally Tindall all predicted a tough 2026 for Perth first-time homebuyers.
“We’re definitely seeing the strongest upwards pressure on prices at the lower quartile of the market,” Mr Lawless said.
“That simply means that prices are rising the most rapidly for properties that are around entry-level pricing.
“So that’s going to be all the more frustrating for first-homebuyers.”
Canstar’s Sally Tindall said it was possible that by the end of next year, the Perth median price could be around $1.1m — a rise of $142,000 in the space of 24 months.
“Would-be first-homebuyers in Perth are now staring down the likelihood of seven-figure house prices in 2026, with the potential for even further rises in 2027, despite predictions of one, if not two, cash-rate hikes in this time,” Ms Tindall said.
Canstar data insights director Sally Tindall.
Canstar data insights director Sally Tindall. Credit: Supplied/TheWest
“In fact, if Westpac’s forecasts play out across house prices (8 per cent in 2026 and 6 per cent in 2027), a median-priced house in Perth could rise by an estimated $142,348 by the end of 2027 — that’s almost $6000 a month.
“While there’s no guarantee these forecasts will materialise, it’s a pretty attractive equation for anyone with skin already in the game.
“Yet for anyone struggling to get into the market, it’s yet another reminder of how far the goalposts can move.”
First-homebuyers got a Federal Government boost in 2005, with a national 5 per cent deposit scheme.
But experts say this has merely driven up the price of housing.
Interest-rate hikes are also predicted for 2026, because of still high inflation rates.
“With the RBA potentially hiking rates this year, staying within your financial means is far safer than drowning in unmanageable debt just to secure a dream home, which could easily then turn into a financial nightmare,” Ms Tindall said.
“While the Home Guarantee Scheme has given thousands of borrowers the leg up on to the property ladder, property prices have risen with them, making it harder for the next wave of first-homebuyers trying to get in.
“Property prices in Australia, particularly in red-hot markets such as Perth, have become unmanageable for the everyday Australian and will remain that way while the balance between supply and demand remains so far out of kilter.”
On top of large deposits needed by first-homebuyers to get a housing loan, they also face huge stamp-duty costs.
REIWA boss Suzanne Brown said WA first-homebuyers faced a tough 2026.
“The greatest challenges for first-homebuyers in 2026 will be affordability and supply,” she said.
“WA property prices have recorded several years of very strong growth.
Editorial by Perth Now
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