Key takeaways
National home values rose 1.0% in November (slowing from 1.1% in October), marking the third consecutive month of 1%+ growth.
Mid-Sized Cities Lead the Surge: Perth (2.4%), Brisbane (1.9%), and Adelaide (1.9%) led the market, while Sydney (0.5%) and Melbourne (0.3%) saw a deceleration in growth.
Record high affordability barriers (8.2x value-to-income ratio) and persistent low supply (40% below average in Perth) mean demand is being concentrated in the most affordable segments and capitals.
The Australian home value index rose another 1.0% in November, marking the third consecutive month where national home values have increased by 1% or more. However, the pace of growth eased slightly over the month, coming down from 1.1% in October. This subtle slowdown was primarily driven by a deceleration in Australia’s two largest cities.
Every capital city, with the exception of Sydney and Melbourne, recorded a rise of at least 1% through the month, led by a solid 2.4% surge in Perth. This "two-speed" condition is similar to the growth pattern seen in 2023 and 2024, where mid-sized capitals are pulling away from the majors.
Capital City Performance in November
The majority of capitals saw strong gains, with regional WA recording a notable 1.8% rise, while Regional NSW and Regional Queensland also posted solid increases.
| Capital City | Monthly Value Change (November) | Key Trend |
|---|---|---|
| Perth | 2.4% | Leading the nation, median value approaching $1M. |
| Brisbane | 1.9% | Pace held firm; unit market leads (2.2% growth). |
| Adelaide | 1.9% | Strongest month since Jan 2022; lower quartile leading. |
| Darwin | 1.9% | Highest monthly growth since May 2021. |
| Hobart | 1.2% | Strongest month since Jan 2022; emerging from flat conditions. |
| ACT (Canberra) | 1.0% | Driven entirely by house values (+1.3%). |
| Sydney | 0.5% | Growth eased; upper quartile flat. |
| Melbourne | 0.3% | Lowest monthly rise; affordability relatively healthier. |
Source: Cotality, December 2025
Affordability, Serviceability, and Supply Challenges
Record levels of housing unaffordability and serviceability barriers are increasingly directing demand towards more affordable price points. Most capital cities are seeing the lower quartile of the market rising the fastest.
| Metric | National Figure (September Quarter) |
|---|---|
| Dwelling Value to Income Ratio | 8.2 times (Record High) |
| Gross Household Income for Mortgage Service | 45% (Near Record High) |
| Rent Cost to Income Ratio | Just over 1/3 (Record High) |
Source: Cotality, December 2025
Persistently low supply levels remain the core upside factor. Advertised stock is tracking at least 40% below the 5-year average in Perth and 29% below in Brisbane, maintaining upward pressure on values despite the affordability ceiling.
Note: New dwelling commencements and completions are also well below decade averages due to construction costs and scarce labour supply.
The Unit Market and Investment Trends
Strong growth continues across the unit sector in several cities, driven by lower price points and heightened investor activity. In Brisbane, units (2.2% rise) are outpacing houses (1.8% rise). Darwin, in particular, is attracting significant investment, with investors comprising 49% of mortgage demand in the September quarter, driven by strong capital gains and high rental yields.
Nationally, credit growth for housing investment is rocketing, rising at its fastest pace since December 2014, with investors comprising around 41% of home lending.
Outlook and Downside Risks
Note: Housing dynamics are becoming more complex, with upside factors (low supply, resilient demand, government schemes) currently outweighing downside risks.
However, the headwinds are significant:
- Interest Rates: The growing expectation that interest rates will be held for an extended period, following the Q3 inflation shock, removes the prospect of a material boost to borrowing capacity.
- Serviceability: Rising serviceability barriers are likely to limit the magnitude of future home value growth as credit becomes less available.
- Regulatory Risk: Although the recently announced 20% limit on high Debt-to-Income (DTI) ratio lending is unlikely to slow price growth significantly, it signals that the regulator (APRA) is alert. A more overt policy adjustment, such as a renewed investment credit growth speed limit, remains a key downside risk given the high share of investor lending.
Overall, home values are expected to continue rising into 2026, but the pace of gains is likely to slow as affordability and serviceability constraints impose a natural ceiling on housing prices.
