Australian Home Values Lift for 3rd Straight Month

Australia’s housing market continued its upward march in November, though the blistering pace of earlier months eased slightly as Sydney and Melbourne lagged behind smaller capitals.

Fresh data from property analytics firm Cotality shows national home values lifted 1 percent in November, marking the third consecutive month of gains at or above that level.

While still strong, the November rise represents a slight cooling from October’s 1.1 percent increase.

Sydney prices grew by 0.5 percent last month and Melbourne by 0.3 percent, well below the 1-percent-plus growth recorded across every other capital city.

Tim Lawless, Cotality’s research director, said the pattern was becoming clear: Australia’s mid-sized capitals are driving the national upswing, while its largest cities face growing affordability barriers.

“The skew towards the mid-sized capitals is especially evident in Perth, where listings are holding more than 40 percent below average,” Lawless said.

He noted that Sydney’s supply pressures were milder, with listings sitting 2.2 percent below the five-year average, compared with an overall 16 percent shortfall across all capitals.

Cotality also pointed to stronger momentum in Brisbane, Adelaide, and Perth—cities where cheaper entry points and deeper supply shortages have kept competition intense.

By contrast, Lawless said the moderation in Sydney “could reflect affordability constraints putting a ceiling on growth.”

Affordability at Its Worst

Cotality’s recent analysis shows housing affordability in September was the worst on record across multiple metrics. In several capitals, it now takes more than a decade to save a standard 20 percent deposit on a median-priced home.

That trend is reinforced by new modelling from PropTrack, which examined how incomes and recent interest rate cuts have influenced purchasing power.

The report found a median-income household earning around $118,000 a year could afford just 15 percent of the homes sold in the 2025 financial year—up slightly from 11 percent the previous year.

For lower-income households at the 30th percentile, the picture is far worse: they could afford just 3 percent of homes sold over the past year.

Saving a deposit also remains out of reach for many. A typical Australian household, putting aside 20 percent of their income toward a 20 percent deposit, now faces a savings stretch of nearly six years.

New South Wales and South Australia are the toughest markets, where a median-income buyer could afford only 11 percent and 10 percent of sold properties, respectively.

Western Australia remains the most affordable.

Deposit Scheme Backlash?

Market sentiment had been buoyed for much of the year by expectations that the Reserve Bank would continue loosening policy after three reductions to the cash rate in the first half of 2025.

But the mood shifted sharply after fresh inflation data landed. The annual inflation rate climbed to 3.8 percent in October, dashing hopes of a pre-Christmas rate cut and signalling a tougher end to the year for households.

The debate intensified when home values jumped 1.1 percent in October—the fastest rise in more than two years and more than double the increase Treasury expected following the government’s expanded first-homebuyer deposit scheme.

The program, launched on Oct. 1, allows nearly 200,000 eligible buyers to purchase a home with a 5 percent deposit and no lenders’ mortgage insurance. Treasury had forecast a mild 0.5 percent price lift spread over six years. Instead, the first month delivered an immediate surge.

The mismatch has prompted questions about whether the scheme—intended to lower barriers to entry—has instead turbocharged demand in an already stretched market.

Housing Minister Clare O’Neil rejected that argument, saying the forces driving price growth have been entrenched for decades.

“House prices are rising too fast in our country, and this has been an issue for our nation for 40 years now,” she told Sunrise.

She defended the program’s purpose, arguing it has “gotten 197,000 young people into their first home where they otherwise wouldn’t have that opportunity.”

“They’re paying off their own mortgage rather than someone else’s. They’ve got safety and security now,” she said.

Nationals Senator Bridget McKenzie accused the government of ignoring clear economic signals.

“You were warned, not just by the Coalition, by economists, that this 5 percent deposit scheme being uncapped would put a lightning match on the housing prices, and that’s exactly what it’s done,” she said earlier in an interview.”