What shaped property prices in 2025 – and what comes next
The Australian housing market delivered an unexpectedly strong result in 2025. Nationally, median prices rose by about 12% over the year, making it one of the strongest years outside the COVID housing boom.
Ray White Group Chief Economist Nerida Conisbee described the outcome as “exceptionally strong”, noting that outside the pandemic surge, growth of this magnitude has not been seen in the past two decades. What stood out even more was the timing, with price growth accelerating through the second half of the year rather than easing.
Performance varied sharply across the country. More affordable markets led the gains, with Perth, Brisbane and Adelaide all recording growth well above the national average. Many regional areas also performed strongly. Sydney and Melbourne still saw prices rise over the year, but momentum softened as 2025 drew to a close.
Why prices rose despite cost-of-living pressures
One key feature of the current cycle has been that price growth is being driven from the lower and middle segments of the market, not the top end, according to Ms Conisbee.
Entry-level homes remain more attainable, and this is also where policy support is most concentrated. Deposit guarantees, shared-equity schemes and stamp duty concessions do not increase borrowing comfort, but they do enable more households to transact, keeping competition strong at the cheaper end of the market.
Employment conditions have also played a crucial role. Ms Conisbee noted that housing markets tend to weaken most sharply when job security deteriorates, not simply when living costs rise. Low unemployment has helped underpin buyer confidence, even as budgets feel stretched.
Why growth is likely to slow in 2026
Supply remains a key constraint as Australia moves into 2026. Elevated construction costs and feasibility challenges continue to limit new housing delivery. In many markets, replacement costs now exceed existing home values, which places ongoing upward pressure on prices.
Looking ahead, prices are still expected to rise in 2026, but at a slower pace than last year. Borrowing capacity remains capped by conservative lending assessments, and there are global risks that could lift funding costs. Taken together, these factors point to more moderate growth rather than a repeat of 2025’s surge.
If you’re thinking about buying, selling or refinancing as the market shifts, contact me to discuss how these market shifts could affect your buying, selling or refinancing plans.