Cotality’s national Home Value Index recorded the smallest gain in five months, with value rising 0.7% in December. Sydney and Melbourne were the biggest drag on the headline growth outcome with values sliding-0.1% lower.
The subtle decline in values across Australia’s two largest cities marked the first month-on-month decline since January last year, priorto rate cuts which commenced in February. Every other capital and broad rest-of-state region recorded a rise in values through December, although most saw some momentum leave the market.
Home Value Index
Tim Lawless, Cotality’s research director, said the softening hints at a weaker start to housing trends in 2026.
“Renewed speculation that the rate cutting cycle is over and the next move from the RBA could be a hike has dented housing confidence.”
“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.”
Despite the softer December outcome, the Home Value Index surged 8.6% higher in 2025, adding approximately $71,400 to the national median dwelling value. This marks the strongest calendar year gain in home values since 2021, when the market rose a stunning 24.5% amid emergency low interest rates and record high levels of purchasing activity.
Every capital city and rest-of-state region recorded an increase in dwelling values over the year, bookended by Darwin, up 18.9% and Melbourne with a milder 4.8% gain.
The upper quartile of the market continues to weigh on growth outcomes. At a national level, upper quartile dwelling values were up 0.2% in December, while values across the lower quartile and middle of the market were 1.1% higher.
“This trend, where upper quartile values have recorded a lower rate of growth, has played out across every capital city through the year, as affordability and serviceability pressures deflect demand towards the lower price points,” Mr Lawless said.
Regional markets have been more resilient to a slowdown, but not completely immune. The monthly pace of growth across the combined regional markets of Australia slowed from 1.2% in November to 1.0% in December. Despite the easing, the monthly pace of gains was double the combined capital cities growth trend, where values rose by 0.5% in December.
Over the calendar year, regional dwelling values rose by9.7%, outpacing the 8.2% rise recorded across the combined capital cities. Across the rest-of-state regions, Western Australia stood out with a 16.1% annual increase, followed by regional Queensland, up 12.6%. Regional Victoria recorded the lowest growth outcome over the year, with values up 6.0%.
Looking ahead to 2026, the housing outlook is less optimistic than 2025. Uncertainty around inflation and interest rate settings is likely to weigh on housing confidence, along with ongoing affordability challenges and renewed focus on household debt and credit policy. However, we aren’t likely to see a material supply response in 2026 either, which should help to offset any downside risk to home values trending substantially lower.
