Australian Property Market Report

Key Market Insights

Australian home values surged 1.1% in October, marking the fastest monthly gain since June 2023, with quarterly growth accelerating to 2.8% and annual growth reaching 6.1%. The market has clearly moved through a positive inflection point following the February rate cut, with capital city values up $53,700 since then.

National Housing Market Metrics

Australia (Quarterly)

+2.8%

Combined Capitals (Quarterly)

+2.9%

Combined Regionals (Quarterly)

+2.4%

Rental Yield Combined Capitals

3.4%

Australia (Annual)

+6.1%

Combined Capitals (Annual)

+5.6%

Combined Regionals (Annual)

+7.5%

Rental Yield Combined Regionals

4.3%

Capital Cities Performance

City	3-Month Growth	Annual Growth	Rental Growth	Gross Yield	Median Price	Market Status
Sydney	+2.3%	+4.0%	+4.2%	3.0%	$1,256,156	Record High
Melbourne	+1.6%	+3.3%	+1.9%	3.6%	$818,975	1.4% below peak
Brisbane	+4.9%	+10.8%	+6.1%	3.5%	$992,864	Record High
Adelaide	+3.2%	+6.7%	+3.4%	3.6%	$867,681	Record High
Perth	+5.4%	+9.4%	+6.3%	4.0%	$884,471	Record High
Hobart	+0.5%	+2.4%	+6.9%	4.4%	$686,262	8.9% below peak
Darwin	+5.4%	+15.4%	+8.5%	6.4%	$564,473	Record High
Canberra	+1.7%	+3.2%	+3.1%	4.0%	$877,937	3.5% below peak

Regional Markets Performance

Region	3-Month Growth	Annual Growth	Rental Growth	Gross Yield	Median Price
Regional NSW	+1.7%	+5.2%	+4.5%	4.1%	$789,928
Regional Victoria	+1.6%	+4.5%	+4.2%	4.3%	$602,646
Regional Queensland	+3.1%	+10.1%	+5.8%	4.3%	$774,728
Regional SA	+2.2%	+10.5%	+5.2%	4.6%	$499,877
Regional WA	+5.3%	+13.5%	+7.1%	5.6%	$629,417
Regional Tasmania	+1.7%	+4.1%	+3.8%	4.5%	$543,650
Regional NT	N/A	N/A	N/A	7.9%	N/A

Regional Market Insights

Western Australia Leading: Regional WA continues to dominate with 13.5% annual growth and 5.3% quarterly gains, driven by mining sector strength and interstate migration.

South Australia Surge: Regional SA posts impressive 10.5% annual growth, benefiting from affordability appeal and lifestyle migration trends.

Queensland Momentum: Regional Queensland maintains strong 10.1% annual growth, supported by continued interstate migration and lifestyle demand.

Regional Outperformance: Combined regional markets (7.5% annual) continue to outperform capitals (5.6%), reflecting ongoing decentralization trends.

Market Performance Charts

Quarterly Growth by Capital City

Perth

+5.4%

Darwin

+5.4%

Brisbane

+4.9%

Adelaide

+3.2%

Sydney

+2.3%

Canberra

+1.7%

Melbourne

+1.6%

Hobart

+0.5%

Annual Growth by Capital City

Darwin

+15.4%

Brisbane

+10.8%

Perth

+9.4%

Adelaide

+6.7%

Sydney

+4.0%

Melbourne

+3.3%

Canberra

+3.2%

Hobart

+2.4%

Major Market Drivers

Growth Drivers

Rate Cut Impact: February rate cut marked clear turning point with 75bps of cuts boosting borrowing capacity by approximately $51,000 for median income households.

Supply Constraints: Advertised supply levels 18% below average while sales tracking 3.1% above five-year average, creating significant supply-demand imbalance.

5% Deposit Scheme: Expanded deposit guarantee scheme launched October 1st adding demand at lower to middle price points of the market.

Auction Strength: Clearance rates holding in high 60% to low 70% range since spring, well above decade average.

Investment Activity: Housing credit for investors rising at fastest pace since June 2015, comprising 38% of mortgage demand.

Market Challenges

Inflation Concerns: Q3 inflation shock potentially limiting future rate cuts with CBA forecasting no more cuts in this cycle.

Construction Pressures: Building costs up 31% over five years, completions 15.6% below decade average, severe margin pressures persist.

Affordability Constraints: Capital city values already up $53,700 since February, offsetting borrowing capacity gains from rate cuts.

Consumer Sentiment: Stubbornly low confidence levels amid cost-of-living pressures and easing labour market conditions.

Regulatory Risk: Potential tightening of investor credit policies looming as regulators monitor rapid credit growth.

Rental Market Trends

Growth Reacceleration: National rental index rising 0.5% per month over past three months, highest growth since May 2024 with vacancy rates at record lows of 1.4%.

Unit Outperformance: Unit rents rising faster than houses - capitals up 4.4% for units vs 3.9% for houses annually, adding $28/week to median unit rent.

Yield Compression: Gross rental yields falling to lowest since October 2022 at 3.40% for capitals as value growth outpaces rental growth.

Darwin Leadership: Darwin recording highest yields at 6.4% and strongest total return of 23.1% with investment loans doubling over past year.

Regional Strength: Regional yields at 4.33% remain significantly higher than capitals, supporting continued investor interest.

Market Outlook

Near-term Momentum: With monthly gains broad-based across all capital cities and regions, and growth accelerating to the fastest pace in over two years, the positive momentum is expected to continue through summer despite potential rate cut limitations.

Supply-Demand Dynamics: The fundamental imbalance between supply and demand likely to persist with dwelling commencements 9.5% below decade average and immediate supply at record lows for this time of year.

Capital City Divergence: Perth and Darwin to maintain leadership positions while Melbourne continues recovery from correction. Sydney approaching affordability ceiling despite record high values.

Regional Resilience: Regional markets expected to maintain outperformance with WA and SA regions particularly strong, supported by resource sector activity and lifestyle migration trends continuing post-pandemic.

Key Risks: Inflation persistence limiting further rate relief, potential investor credit tightening, and construction sector challenges constraining new supply remain primary concerns for 2026.