Quick Bites | House Prices Still Rising

Latest Cotality research shows Australia’s housing affordability has hit new lows over the past five years, with home values drifting even further out of reach and the share of income needed to pay a mortgage has nearly doubled. The Cotality Housing Affordability Report shows 3 out of 4 national metrics (price-to-income ratio, years required to save a deposit, and the share of income needed to rent) have all hit record highs in 2025, signalling that both buying and renting have reached unsustainable levels for many Australians.

The November report’s bottom line: Growth in Australian capital city house prices remained strong, rising 1.0% month-on-month in November, and 7.1% higher year-on-year. Growth continued to be broad-based, though mid-sized capital cities continued to outperform.

Source: Goldman Sachs

Regionally, strong growth has continued across Perth (+2.4%mom), Brisbane (1.9%mom), Adelaide (1.9%mom) and Darwin (+1.9%mom). Price growth in Melbourne (+0.3%mom) and Sydney (0.5%mom) continued at a slower pace, with Cotality suggesting lower growth in Sydney may reflect affordability constraints.

On the rental market, rents rose 0.5% in November to be +5.0%yoy. Vacancy rates remain very low at 1.5%, down from 1.9% a year ago.

On housing demand and supply, Cotality noted that the minor easing in house price growth comes alongside a decline in auction clearance rates across capital cities. They also pointed to housing affordability (the median national dwelling value is at a record 8.2 x annual pre-tax household income) and an expectation that interest rates are unlikely to be cut anytime soon as factors that might weigh on house price growth going forward.

Source: Cotality, ANU

Cotality Head of Research Eliza Owen said a confluence of factors over the pandemic and post-pandemic period years have driven major deterioration in housing affordability.

“Australian home values have climbed roughly 47.3% since March 2020, an extraordinary rise that added about $280,000 to the median dwelling value. This surge was fuelled by pandemic-era monetary stimulus and record-low interest rates that supercharged borrowing capacity and demand, even as housing supply lagged well behind household formation.

“Supply-side limitations have also compounded these demand pressures with construction sector insolvencies, rising material costs, and planning bottlenecks restricted new housing delivery.

“In short, the past five years combined extraordinary demand drivers with supply constraints, creating an extraordinary boom in both home values and rents.”