Breaking into the UK property market has become significantly more challenging as the national median house price soared to a historic peak of £880,000. The latest PropTrack report, released on Monday, reveals this new benchmark was reached after a modest monthly increase of 0.1% and a substantial annual rise of 8.8%.
Regional Performance: A Tale of Two Markets
While the national figure climbed, the picture was mixed across major cities. In December, both Sydney and Melbourne saw prices dip by 0.3%. Despite this monthly fall, values in both cities remain higher than a year ago. Sydney's median home value now stands at a staggering £1.24 million after annual growth of 6.4%, while Melbourne's median reached £854,000 following a 4.5% yearly gain.
The story was markedly different in other capitals. Brisbane's median price tipped over the million-pound mark to £1.01 million, driven by a booming annual growth rate of 14.6%. Adelaide was December's top performer, with home prices jumping 0.8% to a median of £908,000, capping off a 12.8% annual rise. Perth also showed strong momentum, matching Brisbane's monthly growth of 0.5% to hit a median of £950,000, bolstered by an impressive 17.2% annual increase.
Forecasts and Forces Shaping the 2026 Market
Anne Flaherty, senior economist at REA Group and author of the PropTrack report, predicts home prices will reach new highs in 2026, though the pace of growth is expected to slow. 'Price growth in 2025 was supported by three rate cuts,' Ms Flaherty noted. 'With no further interest rate cuts expected in 2026, there is a possibility rates could rise if domestic inflation persists.'
However, she highlighted that limited housing supply and persistent demand could counteract any potential rate hikes by the Reserve Bank of Australia. Government policy is also set to play a role. 'The Australian government's five per cent deposit scheme is also likely to support price growth by driving up demand, particularly at the more affordable end of the market,' Ms Flaherty added.
Further pressure is expected from rising building costs and a tight labour market in the construction sector, which will continue to constrain new housing supply well below national requirements.
Broader Market Context and Data
The report also found that regional areas outperformed the capital cities throughout 2025, recording higher price growth both over the month (0.4%) and across the year. Supporting the PropTrack data, rival firm Cotality reported on Friday that Australian home values surged by 8.6% in 2025, adding approximately £71,400 to the national median dwelling value. This represents the strongest calendar-year gain since 2021, when the market rose 24.5% amid the unique conditions of the pandemic.
