National prices rise modestly as smaller capitals outpace Sydney and Melbourne
National dwelling values continued to climb at the start of 2026, with Australia’s median home price reaching a new high of a little over $880,000 in January, according to the latest PropTrack Home Price Index.
Overall prices rose 0.2% over the month and now sit 8.4% above levels a year earlier.
Across the combined capital cities, values inched up 0.1% in January, while regional markets recorded a stronger 0.3% gain over the same period.
Home values in Sydney rose 0.1% in January, partially reversing a small fall in December. Even so, prices in the harbour city remain below their recent peak, signalling a softening in growth after the solid gains recorded through much of 2025.
Melbourne has shown clearer signs of cooling. The Victorian capital recorded its third consecutive monthly decline in January, although the falls have been minor and values are only 0.8% under their recent high. A larger pool of listings through the spring selling season appears to have given purchasers more options, easing some of the upward pressure on prices in both Sydney and Melbourne.
Conditions remain considerably tighter in Brisbane, Perth and Adelaide, where buyer choice is more limited and price growth has held up.
Adelaide again led the capital city market in January, with values increasing by 0.9% over the month. That monthly rise has contributed to an annual increase of 13.8%, making the South Australian capital the strongest performer among the major cities over the past year.
Brisbane and Perth also recorded further gains, with prices up 0.4% and 0.3% respectively on a month-on-month basis.
“January is a relatively quiet month for housing markets, with lighter sales volumes, which makes it harder to assess the momentum in home prices,” said Angus Moore (pictured right), senior economist at REA Group.
“While conditions were softer in Sydney and Melbourne in recent months, home prices are still likely to head to new highs in 2026, but at a slower pace of growth than in 2025.”
PropTrack noted that January is typically a subdued period for residential transactions, with fewer listings and sales than in spring or early summer. Lighter turnover can make it more difficult to judge the underlying pace of price growth, and monthly results can be more volatile as a result.
Price growth in 2025 was underpinned by three reductions in the cash rate, which eased borrowing costs and helped support demand. That backdrop is now shifting. With inflation running hotter than anticipated in the second half of 2025, a cash rate increase at today’s Reserve Bank meeting is now viewed as a strong possibility.
Any further tightening would add to servicing pressures for new borrowers and those rolling off fixed-rate terms. At the same time, unemployment remains very low, supporting household incomes and underpinning demand for housing finance.
New dwelling supply also remains constrained, with approvals and completions lagging population growth in many parts of the country. Limited new stock, combined with tight rental markets, is expected to continue to provide a floor under prices, even if higher interest rates temper the pace of future gains.
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