Australian Home Prices Just Hit Their Fastest Growth in Over Two Years — And It's Not Slowing Down

The Numbers That Tell the Story

October 2025 will be remembered as the month Australia's housing market officially shifted into high gear.

CoreLogic's Home Value Index surged 1.1% in October, marking the strongest monthly gain since June 2023 and confirming what many suspected: we're in a new property growth cycle.

Across the combined capitals, the 1.1% gain equates to an increase of just over $10,000 in the median dwelling value over the month. Since February, capital city dwelling values are up 5.9%, or approximately $53,700.

Let that sink in: if you owned an average-priced home in an Australian capital city in February, it's worth $53,700 more today. That's the price of a decent new car — gained in just eight months.

Perth is Crushing It

Monthly gains have been broad-based, with every capital city and rest of state region recording a monthly rise in value, ranging from a 1.9% surge in Perth to a 0.3% rise across Hobart.

Perth continues to be Australia's strongest property market, with property values rising by 82.7% over the past five years. The Western Australian capital benefits from:

• Relative affordability compared to Sydney and Melbourne
• Strong wage growth driven by mining and resources sector
• Infrastructure spending on defence and major projects
• Limited supply with restricted land releases
• Interstate migration from expensive eastern capitals

Among Perth suburbs experiencing the fastest price growth in the past 12 months are Belmont-Victoria Park (+11.4%), Kwinana (+9.6%), and Armadale (+9.1%).

What's Behind the Surge?

Several powerful forces are combining to drive prices higher:

1. Interest Rate Cuts

The Reserve Bank of Australia began cutting rates in February 2025, bringing them down from the 4.35% peak. This clear upturn has been gathering momentum since the first rate cut in February, confirming a new cycle of growth.

Further cuts are expected, with rates potentially dropping to the early 3% or even high 2% range by year's end according to some forecasts.

2. Supply Crisis

Despite the flow of new listings rising, they are still 7.6% lower than the same time last year, and 2.1% lower than the historic five-year average.

The supply shortage is severe. Australia has an accumulated housing shortage of around 200,000 dwellings currently, and it is unlikely our housing shortage will be resolved in the next decade.

3. Population Boom

The surge in population growth to a record 660,000 last year, driven by record immigration levels, meant that around an extra 250,000 new homes needed to be built last year alone. But instead, completions have been running around 170,000 as the home building industry struggles to keep up with rising costs and material and labour shortages.

That's an 80,000 home shortfall — in just one year.

4. First Home Buyer Bonanza

Since October 1st 2025, virtually all first home buyers are able to enter the market with just a 5% deposit, via a taxpayer-backed guarantee. Prime Minister Anthony Albanese promised to turbocharge the program by scrapping the $125,000 income cap, making it available to an unlimited number of applicants instead of just 35,000 per year, and dramatically raising property price thresholds.

This is flooding the market with new buyers competing for limited stock, inevitably pushing prices higher.

City-by-City Breakdown

Sydney: The nation's most expensive market continues rising, though growth has moderated in ultra-premium areas. Affordable western suburbs are seeing the strongest gains.

Melbourne: Showing resilience after earlier weakness, with outer suburbs outperforming inner-city areas.

Brisbane: Strong performer benefiting from interstate migration and pre-Olympics infrastructure spending.

Adelaide: Property values surging by 77.2% over the past five years, with suburbs like Adelaide Hills (+9.6%), Playford (+8.9%), and Gawler-Two Wells (+8.4%) leading growth over 12 months.

Perth: The standout market with median dwelling price at $855,267, representing 1.6% monthly increase and 82.7% five-year growth.

Hobart: House prices remain 9.5% below their record highs recorded in March 2022, though showing signs of stabilization.

Darwin: Rising 1.6% through October 2025, with property values up 39.3% over five years. At a new peak price after 37.6% growth over five years. Suburbs like Palmerston (+20.6%), Darwin Suburbs (+12.1%), and Darwin City (+7.1%) led growth.

Canberra: Home prices rose in October and are 3.2% higher than October 2024 levels, though still 3.5% below May 2022 peak after recording 28.8% growth over five years.

The Affordability Crisis Gets Worse

While homeowners are celebrating, this surge is devastating for those trying to enter the market.

As of end of September 2025, the median house price in Australia stands at $929,495, putting homeownership increasingly out of reach for average wage earners.

Australia's property market has reached a new milestone, with the total value of residential real estate climbing to $11.8 trillion for the first time, increasing by $678 billion over the past 12 months.

That wealth is fantastic if you own property. But if you don't, you're watching the goal posts move further away every month.

Upper vs. Lower End Markets

Interestingly, the upper quartile of the market is showing the lowest rate of growth across almost every capital city.

This reflects two dynamics:

Luxury market slowdown: Wealthy buyers are more cautious amid economic uncertainty and have less urgency with high borrowing costs still affecting discretionary purchases.

First home buyer surge: Government incentives are concentrating demand at the affordable end, driving stronger growth in lower-priced suburbs and units.

This trend is creating opportunity for investors willing to buy in more affordable areas with strong fundamentals.

What About Units?

As of end of September 2025, the median price of a unit, apartment, or townhouse across Australia stood at $702,272. Currently, the median unit price in capital cities is $718,495 while in regional areas, it sits at $618,358.

Units remain an attractive option for both investors and first home buyers due to relative affordability compared to houses, with demand particularly strong in metropolitan markets.

However, unit price growth is lagging houses in most markets as buyers prefer detached homes with yards — a preference reinforced by the COVID-19 experience.

The Rental Market Squeeze

The supply shortage isn't just affecting buyers — renters are getting hammered too.

Median apartment rents are likely to grow by 24% between 2025 and 2030 across Australian capital cities, according to a recent report by International Property Consultancy, CBRE.

That's an average increase of nearly 5% per year — well above wage growth for most Australians.

What Experts Are Predicting

A Reuters poll of property analysts forecasts Australian home prices to rise by around 4-5% annually over the next three years. While interest rate cuts are expected to stimulate demand, affordability challenges are likely to prevent any sharp acceleration in price growth.

However, some experts are more bullish. Property analysts suggest we're at the beginning of a new property "supercycle" — not a boom, but a period of prolonged growth driven by:

• Structural undersupply that won't be resolved for a decade
• Continued immigration
• Rate cuts improving borrowing capacity
• Government policies supporting first home buyers
• Limited alternative investment options with bonds and term deposits offering low returns

The Investor Opportunity

For property investors, current conditions present both opportunities and risks.

Opportunities:

• Strong rental yields in tight markets
• Capital growth momentum building
• Lower interest rates improving cash flow
• Government policies supporting demand

Risks:

• Affordability constraints limiting buyer pool at top end
• Potential for policy changes (negative gearing, capital gains tax)
• Economic uncertainty could derail growth
• Oversupply risk in some unit markets

The key is location selection. As one analyst noted: "The markets will remain fragmented. Not all properties in all locations will perform equally."

What This Means for You

If you own property: Congratulations, you just got richer. But don't count on endless growth — affordability constraints will eventually slow the market.

If you're trying to buy: Act quickly. Every month of delay means higher prices. Consider:

• Using the expanded first home buyer guarantee
• Looking at more affordable suburbs with growth potential
• Considering units if houses are out of reach
• Getting pre-approval now before prices rise further

If you're renting:Unfortunately, the news isn't good. Limited supply and strong demand mean rents will continue rising. Consider:

• Negotiating longer lease terms to lock in current rates
• Looking at less popular suburbs
• Sharing accommodation to reduce costs
• Using this as motivation to save for a deposit

The Bottom Line

Australia's housing market is heating up, with September delivering the strongest monthly rise in national dwelling values since October 2023. The CoreLogic HVI jumped 1.1% in October, the fastest monthly gain since June 2023.

October's 1.1% surge isn't just a number — it represents $10,000 added to the median home value in a single month. For the 10 million or so Australians who own property, that's welcome news. For the millions trying to buy their first home, it's yet another painful reminder of how quickly homeownership is slipping out of reach.

With interest rates falling, supply chronically short, immigration strong, and government policies adding fuel to demand, this surge shows no signs of stopping soon.

The property market that was supposed to cool down is instead heating up. And unless something dramatic changes — a sharp economic downturn, major policy intervention, or a construction miracle — Australian home prices will likely keep climbing through 2026 and beyond.

For better or worse, October 2025 may be remembered as the month the next property boom truly began.