40-year review links rapid price growth to wider economic shifts beyond interest rates
Australia’s residential property market has repeatedly recorded strong price gains in conditions that might normally be expected to restrain growth, according to new analysis of 40-year market data by Cotality.
The review, drawn from the firm’s January Housing Chart Pack, shows that some of the strongest annual rises in home values have occurred either during periods of very high interest rates or amid significant global disruption.
Over the past four decades, the strongest annual increases in national home values were recorded in 1988 (31.2%), 2021 (24.5%), 2003 (18.1%), 2001 (15.9%) and 1987 (15.3%).
“Sometimes home values surge when you least expect it,” said Tim Lawless (pictured right), Cotality’s research director. “In 1988, with interest rates near 15% and rising, Australian home values skyrocketed by 31%. Fast forward to 2021, amid a global pandemic and closed borders, national values jumped almost 25%.
“These standout years remind us that housing markets are influenced by more than just interest rates. Fiscal stimulus, credit availability, migration trends and economic shocks all play a role in shaping outcomes.”
On this measure, 2025 ranked as the 11th strongest calendar year for value growth since the mid-1980s.
“Periods of extreme growth often coincide with broader economic shifts, not just monetary policy,” Lawless added. “Over the past 40 years, there have only been six periods when home values have fallen.”
Market size and value growth
Cotality’s latest chart pack estimates that the total value of Australia’s residential real estate reached $12.3 trillion in December.
National dwelling values rose 2.9% over the quarter and 8.6% over the year, which the firm calculates has added about $71,360 to the median Australian dwelling value in 2025. The monthly pace of price growth, however, was moderating across most markets late in the year and into early 2026.
Through the four weeks to Jan. 8, home values in Sydney and Melbourne each edged down 0.01%, while other capitals also recorded slower momentum.
Source: Cotality
Segment performance and sales activity
The report notes that the strongest conditions are generally being seen at the lower end of the value spectrum in most capital cities, with heightened competition for more affordable stock.
Cotality estimates that almost 561,000 residential sales took place in 2025, representing a 4.9% rise on 2024 and sitting 7.2% above the five-year average. National median days on market fell to 27, from 29 a year earlier.
Among the capitals, Perth recorded the quickest selling times at nine days, while Canberra and Darwin had the longest at 37 days and 35 days respectively. For lenders and brokers, this divergence in selling times may flow through to varying levels of urgency among buyers and refinancers across markets.
Listings and stock levels
While new listings have broadly tracked around historical norms since mid-September, total advertised housing stock at a national level remained constrained.
By December, total listings were 15.8% lower than a year earlier and 20.6% below the five-year average for that time of year. The tight overall stock position sits alongside some regional variation in new vendor activity.
Melbourne recorded the largest year-on-year rise in fresh listings, up 15.5% in December, with Sydney also seeing a solid 11.6% increase compared with the previous year. These shifts may bring some relief to buyers in those cities but come against a backdrop of below-average national stock.
Rental conditions
On the rental side of the market, national rents increased 5.2% across 2025, an acceleration from the 4.8% rise in 2024 but still well below the annual growth rates above 8% recorded between 2021 and 2023.
Rents rose across all broad regions, although outcomes varied by location. The strongest annual increase was in regional Western Australia, where rents climbed 10.1%, while Melbourne recorded the smallest rise at 2.9%.
For mortgage providers, the rental figures point to ongoing pressure on tenants, but with some easing from the peak growth rates of recent years, and to differing investment dynamics across states and between metropolitan and regional markets.
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
