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Dwelling prices have continued to rise in November, with the mid-sized capital cities driving most of the surge, with growth expected to ease slightly in 2026 amid affordability and rate pressures.
Cotality’s national Home Value Index showed dwelling values nationwide rose 1.0 per cent in November to $888,941, marking three consecutive months of growth, though slightly slower than October’s 1.1 per cent increase.
In total, the combined capital cities saw a 1 per cent increase over the month, bringing annual growth to 10.6 per cent and a median dwelling price of $978,077.
Cotality’s research director, Tim Lawless, said that mid-sized capitals have been leading home value growth, outpacing larger cities, in a pattern similar to that seen in late 2023 and 2024.
Data showed that Perth led the monthly surge with dwelling values increasing by 2.4 per cent to $914,229, recording an annual growth of 17.9 per cent.
Brisbane, Adelaide and Darwin followed suit with a 1.9 per cent increase in November, with dwelling values now reaching $1,015,76, $891,004 and $578,871, respectively.
“The skew towards the mid-sized capitals is especially evident in Perth, where listings are holding more than 40% below average, buyer demand is elevated, and the 2.4% monthly rise in dwelling values has added just over $21,000 to the median in November, roughly $5,000/week,” Lawless said.
Sydney and Melbourne lag behind
Cotality data showed that every capital city recorded a rise of at least 1.0 per cent in November, though Sydney and Melbourne held back the overall monthly growth.
Over the month, Sydney values rose by 0.5 per cent to $1,269,659, while Melbourne recorded a 0.3 per cent increase in values to $823,495.
Lawless said that Sydney’s lower monthly gain of 0.5 per cent may reflect affordability constraints limiting growth, with the city’s price momentum having peaked at 0.9 per cent in August.
He said that Sydney’s lower growth was also due to the city’s smaller supply deficit, with listings 2.2 per cent below the five-year average, compared with around 16 per cent below average across other capitals.
Additionally, he said that slower growth was also linked to falling auction clearance rates since mid-September, which dipped below the decade average, with Sydney and Melbourne hovering around 60 per cent in late November.
Dwelling growth to ease
According to Lawless, housing growth will likely ease as inflation rebounds, while interest rates have been forecasted to remain steady.
“With inflation once again above the RBA’s target range and rates potentially on hold for the foreseeable future, it's likely housing sentiment will suffer,” Lawless said.
Additionally, he said that housing unaffordability has reached record levels, with the median home costing 8.2 times annual income and mortgage payments taking up 45 per cent of earnings.
“With housing affordability already stretched and worsening, it stands to reason that fewer borrowers will be able to access credit as serviceability barriers become more prominent.”
“We can already see the flow-through effect from such stretched affordability and serviceability measures, with growth in housing values skewed towards lower price points of the market.”
Lawless said last week’s Australian Prudential Regulation Authority (APRA) policy capping high-debt-to-income loans at 20 per cent of new lending will unlikely have a major impact on the market.
“This new credit policy won't be implemented until February next year, but even then, it's likely to only affect the margins of borrowing activity,” Lawless concluded.
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