"Brisbane is no longer the smaller city to look at for affordability, rewarding those who invested early." - Elisha Mapusua, Finance Manager
Australia’s housing market has surged to its fastest growth in nearly four years, with Sydney and Melbourne leading the rebound, Brisbane climbing to second-most expensive, and Perth and Adelaide showing signs of levelling out.
Australian house prices have recorded their strongest quarterly growth since late 2021, marking a turning point for the housing cycle as momentum rotates back to the largest capitals.
New figures from Domain show prices across almost every city rose in the September quarter, setting record highs for both houses and units and confirming the market’s shift into a higher gear.
The rebound has been underpinned by stronger borrowing capacity, improving consumer sentiment, a lift in real incomes, low stock levels and the highest auction clearance rates in more than a year.
Sydney and Melbourne are once again driving the upswing after a long stretch of patchy growth, while the multi-year rallies in Adelaide and Perth appear to be flattening out. Brisbane, meanwhile, has overtaken Melbourne and Canberra to become Australia’s second-most expensive housing market for the first time on record.
Nicola Powell, Chief of Research and Economics, Domain, on Thursday (23 October) said “affordability has been reshaped”.
“We used to look at markets like Brisbane as more affordable and we've now seen a change in price hierarchy,” Ms Powell said.
“Borrowing capacity is slowly diminished in the face of rising property prices, and for first home buyers, it becomes quite challenging.”
Sydney’s median house price rose 3.4 per cent over the quarter to a record $1.75 million – its fastest pace in more than two years and an acceleration on the previous quarter’s gains.
Annual growth has strengthened to 6.3 per cent, reflecting a market that is regaining confidence. Unit prices also reached a record $840,000, up 1.9 per cent for the quarter, though the gap between houses and units has widened to a record 108 per cent.
Peter Vines, Managing Director of RWC Western Sydney, said investors who have been sitting on the sidelines are beginning to re-enter that crucial market.
“Many are seeking to purchase before the next rebound, capitalising on current conditions while they last.
“Improved serviceability is expected to drive more transactions and greater activity across both the commercial and residential sectors.”
He said the defining trends for 2026 will be lower rates, stronger confidence, and sustained demand for quality.
“Western Sydney remains at the centre of this momentum, with its depth of buyers, infrastructure investment, and enduring resilience continuing to position it as Sydney’s growth engine.”
In Melbourne, house prices climbed 2.2 per cent to $1.08 million, the strongest quarterly rise in nearly four years and the fourth straight increase. The city’s housing values are now within 1 per cent of their 2021 peak.
Unit prices lifted 1.7 per cent to $590,600, marking the highest level in more than three years. The renewed growth marks a clear turnaround from 2023, when Melbourne lagged other capitals amid weak sentiment and high listings.
Both cities are benefiting from improving economic conditions, revived buyer confidence and a gradual stabilisation in borrowing costs. The return of international migration and higher household incomes are also helping to absorb affordability pressures.
Brisbane’s housing market continues to rewrite the national price hierarchy.
Median house prices rose 3.7 per cent over the quarter to $1.1 million, overtaking both Canberra and Melbourne to rank second nationally – an unprecedented milestone for the city. Unit prices jumped 4.2 per cent to $715,000, the 18th consecutive quarter of gains and the longest continuous upswing on record.
The city remains a magnet for population inflows from southern states, with lifestyle appeal and relative affordability driving sustained demand. Although growth momentum is beginning to moderate, the underlying imbalance between strong demand and constrained supply continues to push prices higher.
After leading the nation’s growth cycle for the past three years, Adelaide and Perth are showing early signs of stabilisation.
Adelaide’s median house price lifted 3.2 per cent to a record $1.05 million – its 11th straight quarterly rise – but the pace has eased from earlier highs. Annual growth slowed to 10.5 per cent, although it remains the strongest of any capital.
The city’s unit market continues to outperform, rising 5 per cent to $632,700 – enough to make Adelaide the third-most expensive capital for units, ahead of Canberra for the first time.
In Perth, the median house price climbed 1.6 per cent to $981,000, extending a 12-quarter streak of gains but at only a third of the previous quarter’s pace. The city sits just shy of the $1 million threshold and is likely to cross it before year-end. Unit prices rose 4 per cent to $560,000, maintaining Perth’s reputation as one of the strongest unit markets in the country.
Unit prices, quarterly and annual changes
REIWA President Suzanne Brown on Thursday (23 October) said the median house sale price was trending towards 10 per cent growth over the year, while unit prices were on track to achieve 15 per cent growth.
“Previously, the median sale price in the unit market, which includes villas, townhouses, home units and apartments, was growing at a slower rate than the median house sale price.
“We have seen that reverse over the last year or so, with unit price growth now outstripping house price growth.
“We believe strong sale price growth in units and townhouses is occurring as buyers seek more affordable housing options in well located areas.
“Even with unit prices now increasing at a faster pace than houses, there are many suburbs offering units for sale within price points attractive to both first home buyers and investors.
“If you want to live close to the city, at a price point at or below the Perth median, there are units, townhouses and apartments available well below first home buyer thresholds in established inner suburbs, for example Maylands and Victoria Park.
Perth and Adelaide remain underpinned by tight supply and robust local economies, but affordability constraints and slowing momentum suggest their boom phases are beginning to level out.
Canberra’s housing market is showing the first signs of recovery after a two-year lull, with house prices up 2.4 per cent to $1.1 million – the strongest quarterly rise in 18 months. However, unit prices fell 1.5 per cent, the only decline among the capitals.
Hobart, after several subdued years, has rebounded with a 4.7 per cent rise in house prices to $745,000, its fastest increase in almost four years. Unit prices edged up 0.7 per cent, lifting the city’s annual growth rate to 1.7 per cent.
Darwin recorded the nation’s strongest quarterly gain, with house prices jumping 5.3 per cent to $657,000 and units up 6.5 per cent to $389,000 – the highest levels in close to a decade. Although prices remain well below previous peaks, the city’s recovery is now clearly established.
Houses continue to lead the national upswing, but affordability pressures are reshaping buyer preferences.
Unit prices are rising faster than houses in several cities – including Brisbane, Adelaide, Perth and Darwin – as first-home buyers and investors chase relative value.
Across the combined capitals, unit growth has doubled compared with a year ago, reflecting both demand for more affordable options and a chronic undersupply of new developments.
The performance gap between property types remains widest in Sydney and Melbourne, where a detached house now costs more than 80 per cent more than a unit.
But that gap is narrowing elsewhere: in Adelaide it has fallen to a five-year low, and in Perth to its lowest in more than three years.
Despite the breadth of the current upswing, the next phase of the cycle is expected to be more uneven.
The reacceleration in Sydney and Melbourne is offset by early signs of fatigue in Adelaide and Perth, while affordability constraints are beginning to shape demand patterns in most capitals.
Even with interest rates expected to remain steady, stretched household budgets and elevated price-to-income ratios will likely cap the pace of future gains.
Still, the combination of limited housing supply, resilient employment and policy incentives for first-home buyers suggests the market has further room to run through year-end.
“The upswing is no longer patchy but firmly entrenched,” Domain noted in its report.
“Growth remains broad-based, though increasingly uneven as different cities move through the cycle at different speeds.”
The national property cycle has clearly re-entered an expansion phase, but one driven by different engines than before.
With Sydney and Melbourne reclaiming leadership, Brisbane setting new records, and Perth and Adelaide finally slowing, Australia’s housing market is once again redrawing its price map — this time in a higher gear.
Source: Australian Property Investor