Australian Property Market Report

December 2025 | Foresight Property Research

Key Market Insights

National housing values rose 1.0% in November, marking the third consecutive month of 1% or more growth, though the pace is moderating from 1.1% in October. Annual growth reached 7.5%, with Perth (2.4%) leading monthly gains while Sydney (0.5%) and Melbourne (0.3%) showed more modest increases. The divergence between mid-sized capitals and larger cities reflects affordability constraints in premium markets, with Perth adding roughly $5,000/week to median values.

Australia (Monthly)

+1.0%

Combined Capitals (Monthly)

+1.0%

Combined Regionals (Monthly)

+1.1%

Rental Yield Combined Capitals

3.4%

Australia (Annual)

+7.5%

Combined Capitals (Annual)

+7.1%

Combined Regionals (Annual)

+8.6%

Rental Yield Combined Regionals

4.3%

Capital Cities Performance

Capital City Monthly Growth Quarterly Growth Annual Growth Gross Yield Median Value Market Status
Sydney +0.5% +1.8% +5.1% 3.0% $1,269,659 Record High
Melbourne +0.3% +1.6% +4.2% 3.6% $823,495 0.9% below peak
Brisbane +1.9% +5.5% +12.8% 3.4% $1,015,767 Record High
Adelaide +1.9% +4.4% +8.2% 3.5% $891,004 Record High
Perth +2.4% +7.4% +13.1% 3.9% $914,229 Record High
Hobart +1.2% +2.4% +4.7% 4.3% $703,340 6.9% below peak
Darwin +1.9% +5.7% +17.0% 6.3% $578,871 Record High
Canberra +1.0% +2.2% +4.2% 4.0% $891,626 2.4% below peak

Regional Markets Performance

Regional Market Monthly Growth Quarterly Growth Annual Growth Gross Yield Market Characteristics
Regional NSW +0.9% +2.6% +6.2% 4.1% Steady growth, coastal demand resilient
Regional Victoria +0.8% +2.1% +5.1% 4.2% Recovery sustained, tree-change demand
Regional Queensland +1.3% +3.6% +11.4% 4.2% Mining regions strong performer
Regional South Australia +1.0% +2.3% +10.4% 4.6% Strong performance, wine regions attracting buyers
Regional Western Australia +1.7% +5.7% +15.3% 5.5% Mining boom effects, highest annual growth
Regional Tasmania +1.3% +3.0% +4.6% 4.5% Improving conditions, tourism recovery
Regional Northern Territory - - - 7.9% Volatile conditions, high yields

Regional Market Insights

Regional WA continues to dominate with 15.3% annual growth, driven by mining sector strength and severe supply constraints in resource towns.
Regional Queensland maintains strong momentum with 11.4% annual growth, particularly in coal and gas regions benefiting from ongoing mining activity.
Regional SA posts solid quarterly growth of 2.3%, with wine regions and lifestyle markets continuing to attract tree-changers.
Regional Victoria shows sustained recovery with improved quarterly momentum as Melbourne's market strengthens.
Monthly Growth by Capital City (November 2025)
Perth
2.4%
Brisbane
1.9%
Adelaide
1.9%
Darwin
1.9%
Hobart
1.2%
Canberra
1.0%
Sydney
0.5%
Melbourne
0.3%
Annual Growth by Capital City
Darwin
17.0%
Perth
13.1%
Brisbane
12.8%
Adelaide
8.2%
Sydney
5.1%
Hobart
4.7%
Melbourne
4.2%
Canberra
4.2%

Major Market Drivers

Growth Drivers

Persistent Supply Constraints: Listings remain 40%+ below average in Perth, with elevated buyer demand continuing to drive prices higher in mid-sized capitals.
Interest Rate Stability: While the RBA held rates in November, market sentiment remains positive with consumer confidence entering positive territory for the first time since February 2022.
Investment Activity Surge: Housing credit growth for investors rising at fastest pace since December 2014, with NSW recording highest share of investment activity (46.2% by value).
Government Incentives: Expanded 5% deposit guarantee and upcoming 'Help to Buy' shared equity program supporting first home buyer demand.

Market Challenges

Record Affordability Pressures: National dwelling value to household income ratio at record high of 8.2 times, with income required to service median mortgage at near-record 45.0%.
Inflation Rebound: Inflation rising above RBA target range creates expectation that interest rates won't be cut further in near term.
Credit Constraints: APRA's new 20% limit on high debt-to-income ratio lending (6x+) to take effect February 2026, though current impact expected to be marginal.
Auction Clearance Softening: Clearance rates trending lower since mid-September peak, falling below decade average in mid-November with Sydney and Melbourne in low 60% range.

Rental Market Trends

Strong Rental Growth Continues: National rental index up 0.5% in November to be 5.0% higher over past 12 months - highest annual pace since same time last year.
Record Low Vacancies: Rental vacancy rates holding at just 1.5% nationally (down from 1.9% a year ago), maintaining extremely tight market conditions.
Affordability Crisis Deepens: Rent now equates to over one third of pre-tax household income - a new record high in rental affordability pressures.
Yield Compression: National gross rental yields falling to 3.6% - lowest level in three years - as housing values rise faster than rents. Sydney yields lowest at 3.0%, Darwin highest at 6.3%.

Market Outlook

Growth Moderation Expected: With the third consecutive month of 1%+ growth but signs of moderation from October's 1.1%, housing values are expected to continue rising through 2026 but at a slower pace as affordability and serviceability factors create a ceiling on growth.

Geographic Divergence Persists: Mid-sized capitals, particularly Perth and Brisbane, expected to maintain outperformance driven by supply constraints and interstate migration. Sydney and Melbourne growth constrained by affordability barriers, with lower price points seeing fastest gains.

Supply Constraints Continue: Labor shortages and ongoing competition from public infrastructure limiting new construction, with builder profit margins remaining compressed especially in multi-unit sector. Construction costs stabilized but not falling.

Policy Impacts Mixed: Government first home buyer incentives supporting demand at lower price points, though this may only temporarily boost ownership without addressing long-term affordability. APRA's DTI lending limits expected to have marginal impact on overall market.

Data sourced from Cotality Home Value Index December 2025 • This report provides general market information and should not be considered as financial advice