iscover 
Cotality’s Home Value Index, which tracks monthly changes in house prices using property sales data, has found that national dwelling values rose by 0.7 per cent in December, the weakest monthly gain in five months. This took the national median dwelling value to $901,257.
Real Estate Australia’s (REA) PropTrack Home Price Index has also recorded a modest 0.1 per cent increase in December, taking median home values to a record high of $880,000.
A mixed picture
According to Cotality, the Sydney and Melbourne markets were the main price drags on Australia’s house prices after values slipped 0.1 per cent, marking their first month-on-month declines since early 2024.
Every other capital and broad rest-of-state region recorded a rise in values through December, although most saw momentum leave the market.
Brisbane, Darwin, Adelaide, and Perth’s housing markets led monthly growth, rising between 1.6 per cent and 1.9 per cent. Combined capital city values rose 0.5 per cent in December, lagging behind the combined regional market, which climbed 1 per cent.
The slowdown was most pronounced at the upper end of the market. Nationally, upper-quartile dwelling values rose just 0.2 per cent in December, compared with gains of around 1.1 per cent across the lower and middle segments. Cotality said affordability and serviceability pressures have continued to deflect demand toward more affordable price points.
Cotality research director Tim Lawless said the softer December outcome hinted at a weaker start to housing trends in 2026, with interest rates weighing on buyer confidence.
“Renewed speculation that the rate-cutting cycle is over and the next move from the Reserve Bank of Australia (RBA) could be a hike has dented housing confidence,” he said.
“A ‘higher for longer’ setting on interest rates, alongside a resurgence in cost-of-living pressures and worsening affordability pressures, looks to have taken some heat out of the market.”
REA’s PropTrack Home Price Index similarly found that national home prices held relatively steady, with price falls in Sydney and Melbourne offsetting gains in other states.
A bumper year for house prices
Despite the softer finish, the December data still rounded off 2025 as a standout year for house prices. The national median dwelling value rose by about $71,400 over the calendar year, the strongest gain since 2021.
Every capital city and rest-of-state region recorded price growth over 2025, although outcomes varied widely across markets.
Regional markets outperformed the capitals, with combined regional dwelling values rising 9.7 per cent over 2025, compared with an 8.2 per cent increase across the combined capital cities.
Among Australia’s major cities, Brisbane, Adelaide, and Perth’s markets continued to record strong gains, while Darwin has delivered the strongest annual growth of any capital city at 18.9 per cent. Melbourne’s market has posted the weakest annual growth outcome at 4.8 per cent.
Rising rates and affordability fears
Reacting to Cotality’s data, AMP economist Shane Oliver said the December slowdown was partly seasonal, but also reflected intensifying talk of rate hikes at a time when affordability is already stretched.
Oliver said the stronger-than-expected outcome for 2025 had been driven by three RBA rate cuts, the expansion of the 5 per cent first home buyer deposit scheme, the start of the Help to Buy government equity scheme, improved consumer confidence, and an ongoing shortage of housing.
He said price growth accelerated from February when rate cuts began, though this was more than offset by a sharp deterioration in affordability.
Looking ahead, AMP has predicted home prices to continue rising in 2026, but at a slower pace than in 2025, as the interest rate outlook becomes less favourable and affordability constraints bite harder.
AMP anticipated a national price growth of around 5–7 per cent if rates remain on hold, though prices could fall slightly if interest rates rise.
[Related: What does Australia’s housing market look like for 2026?]