With the new year fast approaching, 2025 looks to be wrapping up as another supercharged year for Australian property. 

Demand has consistently outweighed supply, leading to solid gains in some markets and runaway growth in others. With inflation on the rise and affordability worsening, though, can the uplift continue? 

Find out what's in store in this month's market update.

Australian property prices: November 2025

The national median home price lifted another +1.0 per cent over November, according to Cotality's latest report. 

It was another strong month that brought total gains for the spring selling season to +3.1 per cent.

Sydney and Melbourne softened month-on-month, posting gains of +0.5 per cent and +0.3 per cent respectively. 

Meanwhile, the mid-sized capitals had a standout November. Brisbane rocketed above a $1 million median price for the first time, Perth comfortably cleared $900,000, and Adelaide is within touching distance of $900,000.

Hobart and Canberra also saw sudden leaps in growth, lifting +1.2 per cent and +1.0 per cent respectively, while Darwin's boom pushed on, gaining +1.9 per cent. 

Regional markets edged out the capital cities, with regional NSW and Victoria notably outperforming their metropolitan counterparts. 

Cotality's research director, Tim Lawless, noted "The skew towards the mid-sized capitals is especially evident in Perth, where listings are holding more than 40 per cent below average, buyer demand is elevated, and the 2.4 per cent monthly rise in dwelling values has added just over $21,000 to the median in November, roughly $5,000/week."

Three key takeaways from the current market

A number of 2025 property trends have become more firmly entrenched, while other shifts are now just emerging. Here are the headline issues worth tracking. 

Affordability is at record lows, putting further gains at risk

The topic of worsening affordability has been front and centre throughout 2025 as property values continue to climb around Australia. 

According to Cotality analysis, housing affordability in Australia has sunk to record lows based on factors like price-to-income ratio, years required to save a deposit, and the share of income needed to rent.

Cotality's Eliza Owen said "Australian home values have climbed roughly 47.3 per cent 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."

The result is a housing market where the levels of growth we've seen recently appear to be unsustainable, and it's led a number of forecasters to soften their expectations for the 2026 market. 

It's also pushed more buyer activity towards the cheaper end of the market, creating greater competition around homes with entry-level price points and lifting the barrier to entry.

Returning inflation is another growing threat

The latest ABS data has shown an unfortunate rebound in inflation, dashing hopes of the interest rate-cutting cycle to continue in earnest over the coming months. 

“With inflation once again above the RBA’s target range and rates potentially on hold for the foreseeable future, it's likely housing sentiment will suffer,” said Mr. Lawless.

Combined with the growing affordability concerns, he suggested that fewer borrowers will have access to credit as rates stagnate and property prices rise. 

“We can already see the flow-through effect from such stretched affordability and serviceability measures, with growth in housing values skewed towards lower price points of the market," he added.

“Over the past three months, most of the state capitals have seen values across the lower quartile of the market rising the fastest. Melbourne, where housing affordability isn’t quite as stretched, is the one exception, with the city’s broad middle of the market seeing the fastest lift in values.”

The rental market remains incredibly tight with no signs of easing

News for renters is still negative around the country. Nationally, the rental vacancy rate is currently sitting around record lows at 1.5 per cent — a fall from 1.9 per cent just 12 months ago. 

Over the same period, rents have risen +5 per cent, adding further pressure on tenants. 

However, property prices are rising at an even faster clip, leading to a broad drop in gross rental yields for investors. 

A number of agents around the country have reported a clear uptick in investor activity over the spring, and it's a trend that Mr Lawless said speaks to investors' intentions to prioritise capital gains over cashflow, particularly in NSW, which has seen a sharp uptick in investor activity. 

"Such a high level of participation from investors across the state where opportunities for positive cash flow are the lowest is a stark reminder about what motivates Australian investors," he said. 

"An expectation that prices will rise over the medium to long term is the key factor in most housing investment decisions."

What's next for Australian property?

As Cotality's report concluded, "housing dynamics are becoming more complex month to month."

Worsening affordability, a weakening outlook around inflation and interest rates, a tightening of credit limits, and cost-of-living pressures are all acting as headwinds for the property market. 

But there's no shortage of positive pressure, too. Listings remain in very short supply, buyer demand is only increasing after the federal government's changes to the Home Guarantee Scheme in October, and consumer sentiment is surprisingly strong. 

"What’s clear is the upside factors are outweighing the downside risks, and it’s hard to see this dynamic moving into reverse any time soon," Mr Lawless explained. 

"Time will tell whether [November's] slowdown in growth is a reflection of headwinds starting to curtail housing tailwinds."

With housing construction still lagging well behind what's been targeted, the shortfall in supply is likely to persist through 2026, and a challenging rental market continues to push tenants to become buyers, adding to the imbalance between supply and demand. 

Cotality's report forecasts "home values to continue rising through 2026, but the pace of gains is likely to slow as affordability and serviceability factors put a ceiling on how high housing prices can go."