Australia’s housing market has staged an unexpected rebound in 2025, defying severe affordability pressures to deliver an above-decade-average growth rate, according to new analysis from Cotality.
National dwelling values have risen 7.7% through the year-to-date and are expected to finish 2025 at least 8% higher, according to the data analytics firm.
Cotality’s annual “Best of the Best” residential property report finds that while housing affordability in Australia was the worst it’s ever measured, the above-average national price growth was primarily driven by buyers targeting cheaper suburbs that offered good value.
The details
Cotality Australia Head of Research, Eliza Owen, says the 7.7% growth recorded in Australia’s residential property market to the end of November underscores how sharply conditions turned after a sluggish start to the year.
“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 says.
Three RBA rate cuts, an expanded 5% deposit scheme for first-home buyers and chronically low listing volumes helped drive the turnaround.
By November, the market had recorded three straight months of at least 1% growth, pushing the total value of Australia’s housing stock to a record $12 trillion.
Ms Owen says the recovery was strongest in suburbs where buyers could move quickly in response to cheaper credit.
“Tight supply meant even modest demand created upward pressure on prices.
“Cheaper markets had the most acceleration because they remained within reach for buyers navigating higher living costs,” she says.
Prestige Sydney markets in a league of their own
At the top end of the market, Sydney’s blue-chip harbourside enclaves continued to tower over the rest of the country.
Point Piper topped the national list again with a median house value of $17.3 million and units above $3.1 million, followed by Bellevue Hill, Vaucluse, Tamarama and Rose Bay.
“Affordability constraints were a defining feature of 2025, yet premium markets continued to operate on their own cycle,” Eliza Owen says.
“These suburbs are far less sensitive to borrowing costs and listing trends, which is why their performance often diverges from the broader market.”
Mosman recorded the highest total value of house sales nationwide, with $1.58 billion changing hands across 229 transactions.
Exclusive Vaucluse was not far behind with $1.26 billion from just 109 sales.
However, demonstrating how much Australians are chasing value, affordable Tarneit in Melbourne’s outer west saw the third highest value nationwide in terms of house sales, with $1.11 billion in sales across 1,666 properties.
Lower-value markets deliver the strongest gains
In fact, while prestige home sales continue to dominate the headlines, the steepest price rises occurred in more affordable regions, particularly in Western Australia.
The resort town of Kalbarri, nearly 600 kilometers north of Perth, led the nation for house value growth in 2025, surging 40.2% to $515,378, followed by Geraldton suburb Rangeway (32.2%) and Lockyer (32.0%) in Albany.
Queensland delivered similar results in the unit market, with Townsville suburb Cranbrook up 29.3% and Wilsonton near Toowoomba up 26.9%.
Ms Owen says cheaper regions benefitted as buyers adjusted to more favourable credit conditions.
“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 says.
Investors were a key force in many of these markets, with the share of new investor lending reaching 38.3% in WA and 41.1% in Queensland.
Darwin, Brisbane and Perth lead capital-city upswing
The small and often volatile Darwin market was the standout performer among the capitals, posting a 17.1% rise to the end of November after being flat last year.
It was joined by Brisbane and Perth as 2025’s strongest capital-city performers.
Perth’s Mandogalup was the fastest-growing capital-city suburb for houses, up 33% to $944,609.
Several outer Darwin suburbs with entry points below $600,000 also recorded strong growth.
Cotality says Hobart retained the cheapest capital-city house markets, with Gagebrook, Herdsmans Cove and Bridgewater all under $450,000.
Adelaide and Darwin offered the most affordable unit options, from less than $250,000 in Hackham (SA) to $328,416 in Karama (NT).
Regional winners and losers
A broad upswing in non-capital city markets in WA and Queensland contrasted sharply with declines in other regional areas.
House values fell 11.6% in Millthorpe in the Central West of New South Wales and 10.5% in Tennant Creek in the NT.
Eliza Owen says the divergence reflects “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 says.
The outlook
Cotality’s “Best of the Best” report warns that momentum in the property market is likely to cool in 2026, as affordability bites and borrowing assessments by lenders tighten.
National listings remain 18% below their five-year average and construction completions continue to lag population growth, but Ms Owen says low supply alone will not guarantee another strong 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 says.
“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.”