Key takeaways
Steady Growth Continues: The Australian housing market grew for the sixth consecutive month, with values rising a modest 0.6% in July, supported by low supply and the prospect of further interest rate cuts.
Affordability is the Handbrake: Despite positive conditions, severe affordability challenges and a record-high price gap between houses and units are limiting the pace of growth and acting as a significant barrier for buyers.
Rental Crisis Worsens: Renters face increasing pressure as national vacancy rates hold near historic lows at 1.7%, causing the rate of rental price growth to re-accelerate.
The Australian property market is gathering significant momentum as we move further into spring, with national home values marking their most substantial monthly increase since October of 2023. A potent combination of low housing supply and resurgent buyer demand is fueling a broad-based recovery across the nation. Let's dive into the key trends shaping the market this October.
The national housing market has shown remarkable resilience and strength. September's data reveals a clear upward trajectory, indicating a seller's market in many regions.
Key National Housing Market Indicators:
- National Dwelling Values: Increased by 0.8% in September.
- Capital City Values: Led the charge with a 0.9% increase.
- Quarterly Growth: National values are up 2.2% over the September quarter, a significant acceleration from the 1.5% lift seen in the June quarter.
- Median Value Increase: The September quarter rise equates to an increase of just over $18,000 to the median dwelling value.
Capital City Performance: A Tale of Divergence
While growth is widespread, the pace is not uniform across all capital cities. A clear divergence is emerging, with some cities experiencing a much stronger growth trajectory than others. Perth and Brisbane are notably pulling ahead, while Darwin is also showing a powerful surge.
| Capital City | Monthly Change (Sep 2025) | Quarterly Change (Sep Qtr 2025) | 12-Month Change |
|---|---|---|---|
| Perth | 1.6% | 4.0% | 7.5% |
| Brisbane | 1.2% | 3.5% | 8.8% |
| Adelaide | 0.9% | 2.5% | 6.2% |
| Sydney | 0.8% | 2.1% | 3.0% |
| Canberra | 0.7% | 1.7% | 2.5% |
| Melbourne | 0.5% | 1.0% | 1.9% |
| Hobart | 0.1% | 0.1% | 2.7% |
| Darwin | 1.7% | 5.9% | 12.9% |
Source: Cotality, October 2025
The robust performance in Perth, Brisbane, and Darwin can be attributed to a severe mismatch between available housing supply and buyer demand. For-sale listings in these cities are tracking well below the five-year average, while sales activity is estimated to be significantly above average.
The Rental Market: Vacancies Hit New Lows
The rental market continues to tighten, with national vacancy rates slipping to a new record low in September. This is placing upward pressure on rental prices across the country.
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- National Rental Vacancy Rate: Slipped to a new record low in September.
- National Rental Index: Rose by 0.5% in September (seasonally adjusted).
- Quarterly Rental Growth: The national rental index is up 1.4% for the quarter, the highest since June of last year.
Unfortunately for renters, rental listings are continuing to trend lower, tracking about 25% below the five-year average in September, suggesting that tight conditions will persist.
What’s Fueling the Market?
Several key factors are contributing to the current strength in the Australian housing market:
- Low Advertised Stock: A persistent shortage of homes available for sale is creating strong competition among buyers.
- Increased Borrowing Capacity: Recent interest rate cuts have boosted borrowing capacity for many households, supporting demand at higher price points.
- Positive Consumer Sentiment: Despite a minor dip in September, consumer sentiment is significantly higher than a year ago, which is crucial for high-commitment decisions like purchasing a home.
- Real Wages Growth: For the first time since June 2020, real wages are growing, adding to household savings and confidence.
- Government Incentives: The expanded Home Deposit Guarantee scheme, which allows eligible buyers to purchase with as little as a 5% deposit without Lenders Mortgage Insurance, is expected to attract more first-home buyers.
A Look Ahead: A Strong Spring Selling Season
The spring selling season is shaping up to be a strong one, with vendors firmly in the driver's seat. The combination of low supply and high demand creates a recipe for solid selling conditions and is likely to see prices lift further through the remainder of the year.
However, stretched housing affordability remains a significant factor that could keep a lid on the pace of growth. As of June, the national dwelling value to household income ratio was only marginally off record highs at 7.9. As always, we will continue to monitor these trends and bring you the latest insights on the Cotality website.
