Housing boom has arrived

New data from Domain Group suggests Australia’s housing market has shifted into top gear, with property prices across nearly every capital city booming to new highs.

House and unit prices in Domain’s combined capital cities measure hit fresh records in the September quarter of 2025, marking the fastest pace of house price growth in nearly four years and unit growth double the rate of a year ago.

The details

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Domain Group’s House Price Report for the September quarter of 2025 details the strongest price growth in several years, with every capital city recording gains across both houses and units, apart from a slight dip in Canberra’s unit prices.

It was the smaller capitals recording the strongest house price growth, with Darwin up 5.3% and Hobart up 4.7% in just three months.

Among the larger cities, houses in Brisbane put on 3.7% for the quarter (and 10% over the past year), while Sydney accelerated with 3.4% growth, taking the median house price to an eye-watering record $1.75 million.

Domain’s Chief of Research and Economics, Dr Nicola Powell, predicts Sydney’s median house price will reach $2 million in 2 years.

"Sydney has always been the most expensive capital city, with high-priced land, high levels of competition," she says.

“It only needs a 14.2% increase, which is about $250,000, to take it to $2 million – and it’s a real prospect for 2027.”

Even Melbourne, which still hasn’t returned to its Covid boom highs, accelerated to 2.2% price growth over the quarter, taking the city’s median house price to $1,083,043.

Domain attributes the national upswing to “lower interest rates and improved borrowing capacity, a rise in real incomes, a tight jobs market, improving consumer sentiment, low stock levels and the highest auction clearance rates since mid-2023.”

The report adds that expanded first-home buyer policies are likely to fuel further price growth heading into the end of the year.

A big reshuffle

Domain’s report highlights a dramatic reshuffling of Australia’s property hierarchy.

Brisbane has overtaken Melbourne and Canberra to become the nation’s second-most expensive housing market for the first time on record, while Perth is now within $19,000 of a $1 million median house price.

Meanwhile, Adelaide has climbed from the most affordable to the third-most expensive unit market in under four years.

While Brisbane, Darwin, Adelaide (units) and Perth (units) remain the country’s strongest growth engines, supported by population inflows, lifestyle appeal, strong local economies, investor demand and chronic undersupply, Domain says the next phase of the cycle may look different.

“Growth leadership is beginning to shift,” the report observes.

“Sydney and Melbourne have re-emerged, recording their fastest house price rises in more than two and nearly four years, respectively, while Canberra and Brisbane have reached their strongest levels in roughly a year.”

Hobart has also lifted to its highest point in almost four years.

At the same time, the former boom cities Adelaide and Perth are still growing, but at a slower pace.

Domain says this is a sign that their rapid growth phases “may be stabilising as momentum rotates back towards the larger capitals.”

Units gain traction

Although houses continue to lead the market, units are mounting a comeback.

“Most capital cities are experiencing stronger growth for houses, but affordability pressures are reshaping demand,” the report finds.

Units are now outperforming houses in terms of price growth in Brisbane, Adelaide, Perth and Darwin, as buyers seek better value.

The NT capital topped the unit price growth league table with an astonishing 6.5% median price jump in just three months.

Low entry prices - the median unit in Darwin is still only $388,504 - and strong rental yields are fueling considerable interstate investor interest in the small market.

In contrast, houses still dominate in Sydney, Melbourne, Canberra and Hobart.

Unit price growth has accelerated in Sydney, Brisbane, Perth and Darwin but eased in Melbourne and Adelaide (Adelaide units still grew at a breakneck 5% over the quarter), reflecting mixed momentum across markets.

The outlook

Domain says the national property upswing is now “no longer patchy but firmly entrenched.”

In the short term, Domain’s Dr Nicola Powell thinks there’s even stronger price growth to come in Australia’s capital cities.

"Because we've got momentum building, I think we're going to see a larger number next quarter," she says.

"What's clear this quarter is that we've seen the housing market shift into a higher gear.

"We're likely to see momentum still feeding through markets like Sydney, Melbourne, Brisbane and Canberra, because Canberra and Melbourne aren't even at record highs yet."

However, the pace of growth is likely to moderate as affordability constraints start to weigh.

“Growth remains broad-based,” the Domain House Price report concludes, “but it is becoming more uneven as different cities move through the cycle at different speeds and affordability begins to shape buyer choices.”