Australian housing market update | November 2025

Key takeaways

Growth Accelerated Nationally: Australian home values rose by 1.1% in October, the fastest monthly gain since June 2023, pushing the national annual growth rate to 6.1%.

Market Driven by Shortage: This acceleration is due to a supply/demand imbalance, with national home sales tracking 3.1% above average and advertised supply 18% below average.

Affordable Segments Lead: Growth is strongest in the middle (1.4%) and lower (1.2%) price quartiles, likely boosted by the expanded 5% deposit guarantee scheme.

Rate Cuts Off the Table: Economists are no longer forecasting rate cuts in 2025 following the Q3 inflation shock, removing a key factor for future borrowing capacity increases.

Perth Remains Top Performer: Perth led the nation with a 1.9% rise, driven by the most severe supply scarcity, with advertised stock levels tracking 45% below the 5-year average.

The pace of growth in Australian home values accelerated last month, recording a 1.1% gain in October—the fastest since June 2023. Momentum has been building since the first rate cut in February, pushing the national annual rate of growth to 6.1%. Monthly gains were broad-based, with every capital city and regional area recording a rise in values.

Across the combined capitals, the 1.1% gain in October equates to an increase of just over $10,000 in the median dwelling value over the month. Since February, capital city dwelling values are up 5.9%, or approximately $53,700.

The Core Driver: Supply Falling Short of Demand

Note: The accelerating growth conditions are ultimately a reflection of supply falling well short of demand.

Selling conditions were heavily skewed toward vendors through spring:

• Sales Activity: Nationally, the estimate of home sales is tracking 3.1% above the previous 5-year average.
• Advertised Supply: Advertised supply levels are 18% below the 5-year average.
• Auctions: Although auction clearance rates have eased slightly, they have consistently held above the decade average (in the high 60% to low 70% range) since the start of spring.

Growth Across Price Segments

The step-up in growth rates coincides with the expanded 5% deposit guarantee scheme, which likely added to housing demand, particularly at the middle to lower price points. Across the combined capitals, gains were strongest here:

Source: Cotality, November 2025

Regional Market Performance and Rental Trends

Regional markets also posted a solid increase, with a 1.0% rise—the highest since March 2022. Regional WA recorded the strongest growth (1.8%), followed by regional Queensland (1.1%).

Meanwhile, rental growth is accelerating again, as vacancy rates hold around record lows of 1.5%. Cotality’s national rental index has risen by half a percent per month over the past three months, the highest monthly growth since May 2024.

Note: However, housing values are currently rising faster than rents, which has placed renewed downward pressure on gross rental yields, now at their lowest level (3.40%) since October 2022.

Overview of Capital City Diversity

There is significant diversity across capital cities:

• Perth: Continues to lead the nation with a 1.9% rise, driven by supply tracking 45% below the 5-year average. Perth’s median house value rose above Adelaide’s for the first time since July 2018.
• Brisbane: Recorded 1.8% growth, with the unit market leading, driven by listings tracking 31% below average.
• Adelaide: Values jumped 1.4%, with the lower quartile driving the strongest annual increases (9.6% over 12 months). Supply is tracking 36% below average.
• Melbourne: Saw its largest gain since May 2023 at 0.9%, with the middle market seeing the strongest conditions (1.1% growth).
• Sydney: Growth eased to 0.7%, potentially signaling that affordability challenges are curbing demand, with the middle market (1.0% growth) outpacing the upper quartile (0.3%).
• Darwin: Annual growth is the strongest of any capital at 15.4%, yet it maintains a significant affordability advantage. It also leads for rental growth.
• Hobart: Posted a modest 0.3% rise, remaining 8.9% below its March 2022 record high.
• ACT (Canberra): Shows diversity, with house values rising 0.6% while the unit sector remains flat due to high unit supply levels (14.4% above average).

Macroeconomic Headwinds and Outlook

The market faces significant economic challenges that could dampen future momentum:

• Interest Rate Outlook: The Q3 inflation shock means banking sector economists are no longer forecasting a rate cut in 2025. This suggests the cutting cycle may be over, removing the prospect of a material boost to borrowing capacity.
• Supply Crisis: Newly built supply remains insufficient. Dwelling commencements were 9.5% below the decade average in June, and completions were 15.6% below. Rising construction costs are set to keep this insufficient supply low.
• Downside Risks: Severe affordability challenges, stubbornly low consumer sentiment, cost-of-living pressures, and an easing labour market pose risks.
• Investor Credit: Housing credit for investors is rising at the fastest pace since June 2015. A further acceleration could trigger tighter lending policies (Given investors comprise an above-average 38% of mortgage demand), which would dent demand.

Despite these headwinds, the imbalance between supply (at record lows) and resilient demand (above average sales) is likely to persist, supporting home values across Australia for the time being.

About Tim Lawless Tim is Research Director at Cotality (formerly CoreLogic), analysing real estate markets, demographics and economic trends across Australia. Visit www.corelogic.com.au