Key takeaways
House and unit prices across most capital cities hit new record highs, signalling renewed strength.
Sydney, Melbourne, Brisbane, Perth, Adelaide and Hobart all saw prices rise with Brisbane and Perth standing out for sustained, rapid growth. Melbourne house prices finally surpassed their 2021 peak after four years.
In Sydney, Melbourne, Brisbane and Darwin, unit prices outpaced house prices in the December quarter. This reflects a strategic affordability shift, as buyers seek value in more accessible segments — a critical signal for investors focused on yield and future demand.
The gap between house and unit prices continues to influence buyer choices. As detached homes become increasingly unaffordable, demand is pushing into the medium- and high-density markets. Investors ignoring this pivot risk are missing emerging growth pockets.
Domain’s Dr Nicola Powell attributes this momentum to tight supply, strong population growth, and improved borrowing capacity, not a speculative boom.
These long-term fundamentals are continuing to reshape buyer behaviour and price trajectories, especially in lifestyle and migration-driven cities
If you think Australia’s property market has “settled down”… I’d challenge that.
Sure, prices have kept rising in many places, but that’s not the whole story.
What’s happening now is more interesting, and more important if you’re an investor, because the market isn’t moving as one.
Here’s what a lot of investors get wrong at this stage of the cycle.
They’re still looking for one simple answer: is the market up or down?
But Australia’s housing market has moved on from that kind of thinking.
It’s splitting, reshuffling, and quietly changing what “the right property” looks like in each capital city.
The latest Domain House Price Report for December 2025 shows a market that’s still on the move, but not in the way many expected.
Not because it confirms prices rose again (we already knew that), but because it shows where the momentum is shifting, and why buyer behaviour is changing depending on the city and the property type.
So if you’re still thinking in terms of “boom” or “bust”, you’re asking the wrong question.
The better question is: where is demand being redirected, what’s driving those choices, and what does that mean for the next phase of this cycle?
Growth across the capitals, but not all roads look the same
According to the report, the combined capital cities saw both house and unit prices push to new records in the December quarter, with growth at its strongest in years.
That’s a meaningful reset: upturns aren’t just restarting, they’re gaining steam.
Sydney continued its grind higher, with median house prices reaching about $1.76 million, a 2% quarterly lift and about 6.4% annual growth.
Table 1: House prices, quarterly and annual changes
| HOUSES | STRATIFIED MEDIAN PRICE | |||||||
| Capital City | Dec-25 | Sep-25 | Dec-24 | Quarterly change | Annual change | Price peak achieved | Price from peak |
| Sydney | $1,759,909 | $1,725,732 | $1,654,422 | 2.0% | 6.4% | Dec-25 | 0.0% |
| Melbourne | $1,111,084 | $1,079,469 | $1,034,741 | 2.9% | 7.4% | Dec-25 | 0.0% |
| Brisbane | $1,171,237 | $1,120,990 | $1,033,999 | 4.5% | 13.3% | Dec-25 | 0.0% |
| Adelaide | $1,094,427 | $1,042,227 | $978,174 | 5.0% | 11.9% | Dec-25 | 0.0% |
| Canberra | $1,139,969 | $1,100,660 | $1,074,822 | 3.6% | 6.1% | Jun-22 | -2.8% |
| Perth | $1,087,762 | $990,036 | $918,902 | 9.9% | 18.4% | Dec-25 | 0.0% |
| Hobart | $767,451 | $723,141 | $696,069 | 6.1% | 10.3% | Dec-25 | 0.0% |
| Darwin | $690,896 | $669,136 | $564,581 | 3.3% | 22.4% | Dec-25 | 0.0% |
| Combined capitals | $1,280,159 | $1,232,526 | $1,168,431 | 3.9% | 9.6% | Dec-25 | 0.0% |
Units in Sydney are also on the march, up 2.1% in the quarter and nearing record territory, reflecting the growing demand for value‑oriented housing.
Down the road in Melbourne, house prices cracked a long‑awaited new peak at just over $1.11 million, the first in four years, with a fifth consecutive quarter of rising values.
Units also climbed, posting their strongest quarterly gain in six years.
Table 2: Unit prices, quarterly and annual changes
| UNITS | STRATIFIED MEDIAN PRICE | |||||||
| Capital City | Dec-25 | Sep-25 | Dec-24 | Quarterly change | Annual change | Price peak achieved | Price from peak |
| Sydney | $844,390 | $827,020 | $817,854 | 2.1% | 3.2% | Dec-25 | 0.0% |
| Melbourne | $601,184 | $579,352 | $575,680 | 3.8% | 4.4% | Dec-21 | -0.4% |
| Brisbane | $770,471 | $712,519 | $645,584 | 8.1% | 19.3% | Dec-25 | 0.0% |
| Adelaide | $634,366 | $621,979 | $561,728 | 2.0% | 12.9% | Dec-25 | 0.0% |
| Canberra | $611,466 | $619,655 | $620,042 | -1.3% | -1.4% | Sep-23 | -2.3% |
| Perth | $608,520 | $566,736 | $516,425 | 7.4% | 17.8% | Dec-25 | 0.0% |
| Hobart | $526,980 | $526,980 | $519,620 | 0.0% | 1.4% | Sep-22 | -7.3% |
| Darwin | $414,438 | $387,604 | $369,982 | 6.9% | 12.0% | Mar-16 | -14.8% |
| Combined capitals | $722,811 | $698,120 | $676,801 | 3.5% | 6.8% | Dec-25 | 0.0% |
Then there’s Brisbane, where prices tell a very different story: a 12th straight quarter of growth with houses around $1.17 million and units up a stunning 8.1% in just three months.
This underscores a theme Dr Nicola Powell has flagged all year: affordability pressures are pushing more buyers into higher‑density options.
Across Perth, Adelaide and Hobart, houses hit record medians, with Perth notably pushing above $1 million for the first time.
There’s only one capital where units lagged: Canberra’s unit market eased, showing that even inside cities there can be two‑speed growth.
What’s driving this continued momentum?
You can’t talk about this market without talking about basic economics: supply, demand, and affordability pressures.
Domain highlights that demand remains underpinned by:
- Also read:Melbourne property market forecast for 2026 | Is it a good time to invest in Melbourne?
- Also read:Latest Property Price Forecasts Revealed. Australian Property Market Outlook 2026: Where To Now After The Rate Rise.
- Also read:Sydney property market forecast for 2026. Is it a good time to invest in Sydney?
- Also read:Buying Your First Home? Here are 9 Important Things to Keep in Mind
- Also read:Brisbane Property Market Forecast [2026] – What’s Ahead & Where to Invest
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Improved borrowing capacity, even with higher rates, serviceability hasn’t collapsed;
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Tight housing supply: low new listings and constrained land supply keep prices supported;
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Solid labour market and wage growth, underpinning confidence and buyer activity
When supply constraints, population growth, and demand align, prices don’t just rise, they regionalise. That’s exactly what we’re seeing.
Affordability isn’t going away; it’s shaping the winners and losers
One of the most striking takeaways is how affordability pressures are shaping buyer behaviour.
In Sydney, Melbourne, Brisbane and Darwin, unit price growth outpaced houses in the quarter, a clear signal that buyers are shifting where they can find relative value.
Of course, this matters for investors evaluating yield, rental demand and long‑term capital growth. Positioning for where buyers are moving, not where they used to be, is critical.
Dr Powell has repeatedly emphasised that the story of 2025 isn’t about a cooling market; it’s about a reshaping of patterns.
Strong population growth, tight supply and changing buyer preferences keep price momentum alive, yet with notable divergences in how that momentum plays out across cities and housing types.
She suggested that structural forces: from migration to supply constraints, would keep markets moving even as the pace moderates.
That’s exactly what the December data points to: continued gains, but with different drivers and different champions.
So what does this mean for investors today?
If you strip it back, three big strategic ideas stand out:
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Location and property type matter more than headline growth rates. A 5% city‑wide rise hides the fact that units might be outpacing houses, or regional markets may be behaving very differently from capitals.
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Affordability pressures aren’t a weakness, they’re a directional signal. Where affordability is tight, buyers shift, which in turn shifts capital flows and rental demand.
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Macro tailwinds are intact, but not uniform. Population growth, supply tightness and employment strength underpin demand, but local conditions and planning settings are the real battleground.
In short, the market isn’t “flat” or “cooling”, it’s evolving.
And understanding how it’s evolving is what separates opportunistic investors from reactive ones.
The December 2025 Domain House Price Report confirms that Australian property markets remain active and resilient.
No, it's not a return to boom‑times exuberance, but neither is it stagnation.
Instead, we’re in a phase of divergence and rebalancing, one that rewards nuanced, data‑driven decisions.
For serious investors and advisers, that’s the real story: growth with nuance, opportunity with caution, and strategy with precision.
