Are Australia property prices going up in 2025?

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Everything you need to know before buying real estate is included in our Australia Property Pack

As we reach mid-2025, Australian property prices have hit record highs with the national average crossing $1 million for the first time, leaving many wondering if this upward momentum will continue or if we're due for a correction.

If you want to go deeper, you can check our pack of documents related to the real estate market in Australia, based on reliable facts and data, not opinions or rumors.

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

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BAMBOOROUTES

A team specialized in real estate investing in APAC countries (Japan, Thailand, Indonesia, Australia, etc.).

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Australia. If you'd like to learn more about us, you can check our presentation page.

What is the current median house price across Australia as of June 2025?

Australian property prices have reached unprecedented levels, with the national median dwelling price hitting $1,002,500 for the first time in history.

As of June 2025, the median house price in Australia stands at $898,604, while units average $668,234. The combined residential dwelling stock is now valued at a staggering $11.37 trillion, representing 11,338,500 dwellings nationwide.

Capital city prices vary significantly across the country. Sydney remains the most expensive market with a median house price of $1,486,373 and units at $859,811. Brisbane follows at $890,750 for houses, while Melbourne sits at $939,965. Adelaide has surged past the million-dollar mark at $1,010,900, Perth hovers around $848,980, and Canberra approaches $950,000.

Regional markets have shown remarkable strength, with some areas outperforming capital cities. The gap between regional and capital city growth has narrowed from its pandemic-era peaks, with regional dwelling values rising 1.5% in the three months to April 2025, compared to 1.0% in capitals.

These record prices reflect a market that has more than doubled in value over the past decade across most major cities, driven by chronic undersupply, strong population growth, and sustained demand from both owner-occupiers and investors.

How much have Australian property prices increased in the last 12 months?

National property prices have risen 5.1% for houses and 4.5% for units over the past year, though growth rates vary dramatically between cities and property types.

Perth leads the nation with annual growth of 8.6%, followed closely by Brisbane at 7.1% and Adelaide showing similar strength. In contrast, Melbourne continues to struggle with prices down 1.2% annually, while Sydney has managed modest growth of just 1.2% over the year to May 2025.

The first five months of 2025 saw national dwelling values rise 1.7%, with a 0.5% increase in May alone. This represents a moderation from the rapid growth seen during the pandemic years but still indicates a healthy market. Regional areas have been particularly strong, with regional Western Australia up 12.5% and regional South Australia gaining 12.4% annually.

Unit markets have begun outperforming houses in most capital cities, with 62.9% of apartment markets recording equal or higher median price growth than houses. Brisbane leads this trend with 76.3% of apartment markets outperforming houses, followed by Perth at 75% and Sydney at 71.4%.

The momentum has shifted notably since the Reserve Bank's rate cut in May 2025, with buyer activity increasing and auction clearance rates improving across most markets.

Which Australian cities are experiencing the fastest property price growth right now?

Perth, Brisbane, and Adelaide are the clear winners in Australia's property market as of June 2025, consistently outperforming the larger eastern capitals.

Perth continues its stellar run with property values up 8.6% annually and forecasts suggesting 8-10% growth for the full year. The Western Australian capital benefits from a resources boom, strong interstate migration, and relatively affordable prices compared to Sydney and Melbourne. Suburbs like Rockingham and Stirling are seeing double-digit growth.

Brisbane's market remains robust with 7.1% annual growth, driven by continued interstate migration from southern states and a chronic apartment shortage. Areas like Beenleigh (+11.2%), Strathpine (+11%), and Redcliffe (+10.9%) are leading the charge. The city's unit market is particularly strong, with predictions of 7-9% growth for apartments in 2025.

Adelaide has emerged as a surprise performer, with property values surging 93.6% over the past decade and continuing strong momentum. Suburbs like Gawler-Two Wells (+12%), Playford (+11.5%), and Salisbury (+10.3%) are recording exceptional growth rates.

Among regional areas, Townsville is forecast to achieve 25-30% growth in 2025, making it potentially the nation's best performer. The Sunshine Coast, with a median house price of $1,050,000, is expected to be the second-best performer nationally.

What are property price forecasts for 2026 and beyond?

Property market experts predict stronger growth in 2026 compared to 2025, with houses forecast to rise 6% and units 5.5% nationally.

KPMG's analysis suggests the market will experience "a year of two halves" in 2025, with slower growth in the first half followed by acceleration as interest rate cuts take effect. The second half of 2025 and into 2026 is expected to see increased buyer confidence and Fear of Missing Out (FOMO) driving prices higher.

It's something we develop in detail in our Australia property pack.

Medium-term forecasts are particularly bullish. If current trends persist, average house prices could rise by 61% in Sydney, 68% in Brisbane, 75% in Adelaide, and 66% in Perth by 2030. Some analysts, including Louis Christopher from SQM Research, predict potential jumps of 8-15% in certain markets once government housing policies fully kick in.

The long-term outlook remains positive, with Australia's population expected to grow from 27 million to 40 million over the next four decades. Combined with chronic undersupply - Australia needs 240,000-280,000 new homes annually but is falling short by over 260,000 - this demographic pressure suggests sustained price growth.

Over the past 30 years, Australian house prices have averaged 6.4% annual growth despite various economic crises, suggesting similar long-term trends could continue.

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How are apartments performing compared to houses in 2025?

Apartments are experiencing a remarkable renaissance in 2025, outperforming houses in most capital cities for the first time in years.

Units are forecast to grow 4.6% in 2025 compared to 3.3% for houses, driven primarily by affordability constraints pushing buyers toward more affordable options. The median unit price nationally sits at $668,234, significantly below the $898,604 median for houses, making apartments an attractive entry point for first-home buyers and investors.

This shift reflects changing buyer preferences and economic realities. High interest rates have reduced borrowing capacity, making the price gap between houses and apartments more significant. Additionally, lifestyle changes post-pandemic have made apartment living more acceptable, especially in well-located areas with good amenities.

Investors are particularly attracted to apartments due to higher rental yields and lower entry prices. The chronic apartment shortage in cities like Brisbane is creating exceptional growth opportunities, while established apartments in Sydney and Melbourne are trading well below replacement cost, offering value for money.

What impact will the recent RBA interest rate cut have on property prices?

The Reserve Bank's May 2025 rate cut to 3.85% has already begun stimulating the property market, with further cuts expected to accelerate price growth significantly.

The 0.25% reduction has increased borrowing capacity by approximately $12,000 for average income earners and reduced monthly repayments on existing mortgages. More importantly, it has shifted market sentiment from cautious to optimistic, with buyer activity increasing 14% in some markets following the announcement.

Economists expect 2-3 additional rate cuts through 2025, potentially bringing the cash rate to 2.85% by early 2026. Each 0.25% cut typically increases borrowing capacity by 2-3%, meaning cumulative cuts could boost purchasing power by 8-12%. Combined with APRA potentially relaxing its 3% serviceability buffer, this could add $50,000-100,000 to average borrowing capacities.

The psychological impact is equally important. Lower rates signal economic confidence and encourage fence-sitting buyers to enter the market. Real estate agents report increased attendance at open homes and stronger bidding at auctions since the May cut. This increased competition is already pushing prices higher in sought-after areas.

Market analysts predict the combination of multiple rate cuts and improving sentiment could trigger price growth of 8-15% in hot markets, particularly in the sub-$1 million segment where first-home buyers compete.

How will the 2025 federal election housing policies affect property prices?

Both major parties' housing policies are expected to inject significant demand into the property market, with experts warning of potential price surges of 8-15% in certain segments.

You'll find comprehensive analysis of these policies in our Australia property pack.

Labor's flagship policy removes income caps and increases price thresholds on their 5% deposit scheme for first-home buyers, effectively opening homeownership to a broader population. The scheme, commencing January 2026, could see 80,000 buyers enter the market simultaneously. Additionally, their promise of 100,000 new homes specifically for first-home buyers adds supply-side support.

The Coalition's proposals include making mortgage interest tax-deductible on new builds and allowing super withdrawals up to $50,000 for home deposits. These measures significantly boost purchasing power, particularly for younger buyers struggling with deposits.

Market analysts warn these demand-side policies, combined with rate cuts, create a "perfect storm" for price acceleration. Stuart Wemyss from ProSolution Private Clients suggests savvy buyers should purchase before these schemes commence, as the influx of new buyers will intensify competition and drive prices higher.

The policies' focus on first-home buyers means the sub-$1 million market segment will likely experience the strongest growth, potentially pricing out those who wait.

We made this infographic to show you how property prices in Australia compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It's an easy way to spot where you might get the best value for your money. We hope you like it.

What role is foreign investment playing in Australian property prices in 2025?

Foreign investment's impact on Australian property prices has been significantly curtailed by new government restrictions taking effect from April 2025.

The federal government implemented a two-year ban on foreign purchases of existing dwellings, running until March 2027. This measure aims to reduce competition for limited housing stock and ease pressure on prices. Foreign buyers can only purchase new dwellings, with a maximum 50% cap in new developments to ensure local buyers retain access.

Historical data shows foreign investment primarily concentrated in Sydney and Melbourne's high-end markets, focusing on new apartments and luxury homes. In 2024, foreign investment proposals fell 15.13% by volume and 16.46% by value, indicating the cooling effect of tighter regulations even before the outright ban.

The new rules include higher application fees and stricter compliance measures. Foreign investors who purchase vacant land must develop it within specified timeframes or face penalties. These changes effectively remove a significant source of demand from the established housing market.

While the ban may provide some price relief in previously popular foreign investment areas, experts suggest the impact will be limited given foreign buyers represented only 3-5% of total transactions. The measure is more politically symbolic than economically transformative, with domestic factors like interest rates and migration having far greater influence on prices.

Which property types and locations offer the best growth potential?

Strategic property selection has become crucial in 2025, with performance gaps between suburbs widening significantly across Australian markets.

Regional centers are emerging as surprise performers, with cities like Townsville (forecast 25-30% growth), Sunshine Coast, and Toowoomba expected to achieve double-digit gains. These areas benefit from pandemic-era population shifts becoming permanent, improved infrastructure, and relative affordability compared to capitals.

In capital cities, outer-ring suburbs are outperforming inner-city areas. Brisbane's Beenleigh (+11.2%), Adelaide's Gawler-Two Wells (+12%), and Perth's Rockingham represent the sweet spot of affordability meeting infrastructure investment. These areas attract both upgraders and first-home buyers priced out of traditional suburbs.

Property types seeing strongest demand include:- Affordable apartments near transport hubs (especially in Brisbane and Perth)- Townhouses offering a middle ground between houses and units- Properties suitable for multi-generational living- Homes with dedicated work-from-home spaces- New builds eligible for government incentives

Avoid luxury apartments in Melbourne's CBD (oversupply issues), mining-dependent regional towns without economic diversity, and flood-prone areas facing insurance challenges. The key is finding properties below median prices in areas with population growth, infrastructure investment, and economic diversity.

What housing supply challenges does Australia face in 2025?

Australia's housing crisis has intensified in 2025, with supply falling drastically short of ambitious government targets and population growth.

The federal government's target of 1.2 million new homes by 2029 faces a projected shortfall of 262,000 dwellings. Current construction rates would need to increase by 40% to meet demand, but rising construction costs, labor shortages, and planning delays make this unlikely.

The crisis is particularly acute in rental markets, where vacancy rates hover near 1% in major cities. This shortage drives both rental prices and purchase demand, as frustrated renters compete to buy. Every new migrant requires housing, but with 446,000 net overseas migration in 2024 and construction completions lagging, the supply-demand imbalance worsens monthly.

State-specific challenges compound the problem. Sydney faces geographical constraints and NIMBY resistance to densification. Melbourne struggles with infrastructure keeping pace with urban sprawl. Brisbane lacks sufficient apartment stock for its growing population. Perth's construction sector can't scale quickly enough to meet mining boom-driven demand.

Without dramatic intervention - including planning reform, skilled migration for construction workers, and innovative building methods - the supply shortage will continue driving prices upward for years. This structural undersupply provides a strong floor under property prices, making significant price falls unlikely despite economic headwinds.

How do current Australian property prices compare to historical levels?

Australian property prices have reached extraordinary heights compared to historical benchmarks, with most cities seeing values double or triple over the past decade.

Over the past five years alone, Australia experienced its fastest home price boom in history. Many suburbs saw increases of $200,000 to $1 million, particularly during the 2020-2022 pandemic surge. Sydney house prices have risen 97% over ten years, effectively doubling, while Brisbane, Adelaide, and Melbourne achieved 80-100% gains.

More details about historical trends are available in our Australia property pack.

The long view is even more dramatic. A home bought for $122,870 in 1991 would be worth $795,208 by 2021 - a sixfold increase. Over 30 years, Australian property has averaged 6.4% annual growth, outperforming most investment classes despite multiple economic crises.

Current prices sit at record highs, with the national median crossing $1 million for the first time. While this represents stretched affordability, historical patterns suggest Australian property's long-term trajectory remains upward, supported by fundamental supply-demand imbalances.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Sources

1. Australian Bureau of Statistics - Total Value of Dwellings
2. KPMG - Residential Property Market Outlook
3. CoreLogic - Regional vs Capital City Performance
4. REA Group - Units Outperforming Houses Analysis
5. Property Update - Australian Property Market Predictions
6. Domain - House Price Report March 2025
7. Global Property Guide - Australia Price History
8. MacroBusiness - House Price Projections
9. National Housing Supply and Affordability Council - State of Housing 2025
10. DPN - 30-Year Property Growth Analysis