The highs and lows: 2025 national market retrospective

In its Best of the Best 2025 report, Cotality said that national dwelling values would end the year higher than anticipated, while investor participation had been prominent throughout the year, and rent values boomed.

Home values

According to the report, national home values were likely to finish the year strong, forecast to be at least 8 per cent higher than the start of the year, after year-to-date (YTD) growth sat at 7.7 per cent through the first 11 months.

Cotality said that by September this year, the median dwelling value was 8.2 per cent times higher than the median household income, with about 11 years required to save a 20 per cent deposit.

The report showed that while the rate of growth in home values had been easing through the second half of 2024, it was revived in 2025 by three interest rate cuts, an easing in inflationary pressures, the 5 per cent deposit scheme, and supply constraints.

When it came to year-to-date (YTD) performances across capital cities compared to 2024, Darwin home values showed the strongest increase of 17.1 per cent, following a flat result in the same period in 2024.

Perth and Brisbane, which had recorded high growth in 2024, continued to show momentum, posting double-digit increases of just under 15 per cent.

Cotality said Melbourne and Sydney’s more modest growth of around 2 per cent and 3 per cent, respectively, showed differences in supply and demand and more affordability constraints.

As for the regional markets, growth was particularly recorded across Queensland, Western Australia (WA), and NSW.

Capital growth

Cotality said lower-priced dwellings had significantly contributed to the top capital growth performers over the past year.

The report showed that the highest house market growth had been in Kalbarri, in regional WA, which had a median value of just $515,000 and recorded a 40.2 per cent increase.

Likewise, the strongest unit growth was in Gray, in Darwin, which showed a median value of $344,000 and an annual rise of 33.3 per cent.

“Nation-wide, the 25th percentile dwelling was $684,000, alongside a median of $892,000 and a 75th percentile dwelling value of $1,119,000,” Cotality said.

Investor participation

On the buyer front, Cotality said investors had become more prominent in 2025, with the value of new mortgage lending to investors reaching 40.6 per cent in September.

The result marked a rise from 38.7 per cent a year prior, and followed a low of 23.8 per cent in the December quarter of 2020.

Investor participation was also found to be tracking above the decade average of 33.4 per cent, with the lending concentration at the highest share since December 2016.

Investor activity in the market will not be expected to slow down in 2026, despite the recent announcement by the Australian Prudential Regulation Authority (APRA) to limit new loans with a debt-to-income ratio of six or more.

Cotality said APRA’s move was a preventative measure which would not have much market impact in the near term.

Rent values

National rent values also gained momentum, increasing 5.0 per cent in the year to November, up from a 3.4 per cent increase through the year to May.

The median weekly rental rate across Australian dwellings was $679, while the gross rent yield year-on-year was 3.6 per cent in November, down 10 basis points from a year ago.

Across the country, similarly to sale prices, Darwin led rent value gains across the capitals, with an increase of 8.6 per cent.

The report showed that all other capitals, except Adelaide, recorded increases in rent values throughout the year.

Top performing suburbs

Cotality also identified the best-performing suburbs based on various indicators, including median prices, changes in values, rental prices and yields for houses and units.

The most expensive suburb for both houses and units was Sydney’s Point Piper, with a median house price of $17,313,502, and a median unit price of $3,134,530.

The most affordable suburb for houses was Coober Pedy, in South Australia, with a median house price of $80,822, while Laguna Quays, Queensland, was the most affordable suburb for units with a median price of $114,751.

The highest 12-month change in house values was seen in Kalbarri, WA, with a 40.2 per cent rise, while the largest change in unit values was recorded in Gray, in Darwin, with a 33.3 per cent increase over the year.

In 2025, the lowest growth in house values was in NSW’s Millthorpe region, recording a decrease of -11.6 per cent, while Kirribilli in Sydney saw the largest fall in unit values of -14.8 per cent.

Pegs Creek, WA, revealed the highest 12-month change in house rents of 23.5 per cent, while Rockhampton City, Queensland, showed the highest annual change in unit rents, recording a 21.1 per cent increase.

While Newman, WA, had the highest gross rental yields for houses, at 12.6 per cent, the South Hedland region had the highest for units, at up to 17.8 per cent.

What’s to come in 2026?

Cotality has forecast more challenges in the housing market for 2026, with a slower pace of growth expected amid higher-than-ideal inflation, potential further macroprudential tightening, and stretched affordability.

With the unemployment rate gradually rising in 2025, the trend may continue into 2026, potentially leading to softer wages and a decline in purchasing power if prices continue to rise.