Australia’s Housing Market Evolves: Insights from Domain’s December 2025 Report
Australia’s housing market is experiencing significant changes, according to the recent Domain House Price Report for December 2025. The report highlights new record highs for house and unit prices across major capital cities, indicating a resurgence in the market. While cities like Sydney, Melbourne, and Brisbane are leading this growth, affordability shifts are reshaping buyer preferences.
Record High Prices Across Capital Cities
In December 2025, house and unit prices in capital cities surged, with notable quarterly and annual growth across the board. Sydney’s median house prices reached approximately $1.76 million, reflecting a 2% increase from the previous quarter and a robust 6.4% annual growth. Melbourne’s house prices also hit new peaks, surpassing $1.11 million for the first time in four years, with consistent upward trends experienced over five consecutive quarters.
Quarterly and Annual Changes for Houses
| Capital City | Dec-25 | Quarterly Change | Annual Change |
|---|---|---|---|
| Sydney | $1,759,909 | 2.0% | 6.4% |
| Melbourne | $1,111,084 | 2.9% | 7.4% |
| Brisbane | $1,171,237 | 4.5% | 13.3% |
| Adelaide | $1,094,427 | 5.0% | 11.9% |
| Perth | $1,087,762 | 9.9% | 18.4% |
| Hobart | $767,451 | 6.1% | 10.3% |
| Darwin | $690,896 | 3.3% | 22.4% |
Unit Price Trends Reflect Changing Preferences
Unit prices are also on the rise, with Sydney reporting a quarterly increase of 2.1%. In Brisbane, unit prices soared by 8.1% in just three months, fueled by affordability pressures pushing buyers towards medium- and high-density housing options. This trend highlights a shift in buyer behavior as traditional detached homes become increasingly unaffordable.
Factors Driving Market Momentum
The observed developments in the housing market are primarily driven by several key factors:
- Improved Borrowing Capacity: Despite rising rates, enhanced serviceability remains stable.
- Tight Housing Supply: Low listings and constrained land availability keep prices elevated.
- Strong Labor Market: Healthy wage growth boosts confidence and buyer activity.
Understanding the Market Evolution
Investors need to recognize that the market is evolving. It is no longer a straightforward scenario of rising or falling prices. Instead, understanding shifting demands and regional behaviors is crucial. As Dr. Nicola Powell from Domain indicates, affordability pressures are not a weakness but rather a directional signal for investment strategies. The December report underscores continued gains, driven by different factors across various cities and property types.
In conclusion, the December 2025 Domain House Price Report illustrates a vibrant Australian housing market characterized by diverging trends. Investors should focus on strategic insights from this evolving environment to effectively position for future opportunities in the property market.
