The dream of homeownership in Australia has become more challenging, with the national median house price soaring to a record-breaking $880,000 in December. This new peak, confirmed in the latest PropTrack report, underscores a market that continues to defy affordability pressures.
Capital City Performance: A Tale of Two Speeds
While the national figure climbed, the performance of individual capital cities was mixed. Sydney and Melbourne both saw prices dip by 0.3% in December. Despite this monthly softening, their annual growth remained positive, with Sydney's median hitting $1.24 million (up 6.4% year-on-year) and Melbourne's reaching $854,000 (up 4.5%).
In contrast, other capitals powered ahead. Brisbane's median price tipped over the million-dollar mark to $1.01 million, buoyed by a staggering annual growth of 14.6%. Adelaide was the standout performer in December, with a 0.8% monthly rise taking its median to $908,000 after a 12.8% annual gain. Perth also showed strength, matching Brisbane's monthly growth of 0.5% to hit a median of $950,000, following an impressive 17.2% surge over the year.
Regional Strength and the Forces Driving Prices
The report highlighted that regional areas consistently outperformed the capital cities throughout 2025, recording higher price growth both monthly (0.4%) and across the year. Senior economist Anne Flaherty of the REA Group, the report's author, pointed to several key factors supporting the market.
Three interest rate cuts in 2025 provided significant support for price growth. However, the outlook for 2026 is more uncertain. "With no further interest rate cuts expected in 2026, there is a possibility rates could rise if domestic inflation persists," Ms Flaherty cautioned.
She also identified powerful counterforces. "Limited housing supply and persistent demand could counteract any rate hikes by the Reserve Bank of Australia," she noted. The federal government's five per cent deposit scheme is also likely to fuel demand, particularly in the more affordable market segments. Furthermore, rising construction costs and a tight labour market will continue to constrain new housing supply.
Outlook for 2026: Slower Growth Amid New Highs
PropTrack's analysis predicts that home prices will reach new highs in 2026, though the pace of growth is expected to slow. This forecast aligns with data from rival firm CoreLogic, which reported on Friday that Australian home values surged by 8.6% in 2025, adding approximately $71,400 to the national median. This marked the strongest calendar-year gain since 2021's pandemic-driven boom.
The confluence of strong underlying demand, government incentives, and a chronic shortage of new homes suggests the affordability challenge is set to remain a central feature of the Australian property landscape for the foreseeable future.
