Sydney, Melbourne property markets fall as national growth slows

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Housing continues to cool off in Australia after a period of growth that has been fuelled by increasing interest rates over the years.

According to research from Cotality, December experienced the slowest price growth in five months, with price increases for all Australia only 0.7 per cent compared to a year ago. Sydney and Melbourne both reported declines of 0.1 per cent in December, their very first month of negative growth since early last year.

Tim Lawless, Director of Research for Cotality, suggests that buyers are hesitant to purchase homes due to higher interest rates, rising living costs and increasing affordability issues. It is anticipated that the current conditions for both Sydney and Melbourne will not improve significantly until the end of 2026; however, significant price declines are not anticipated during this time period.

While home values are decreasing across Australia, home values still increased slightly in 2025 compared to previous years. In 2025, home values in Australia increased an average of 8.6% from the previous year to a median value of $70000. This is the fastest rate of growth since 2021.

The December results are different between cities; the cities of Perth and Adelaide were the top two cities to experience a price increase of 1.9% each while Brisbane and Darwin both had price increases of 1.6%, Hobart had an increase of 0.9% and Canberra had a 0.2% increase.

Analysts believe the current high level of demand for housing is due to limited housing supply, negative impacts caused due to COVID-19 and low deposit schemes offered by government agencies, and thus a continued interest in purchasing affordable homes priced under $1000000 in particular and cities like Perth and Adelaide continue to be popular among buyers.

More updates to come on AusNewsLanka.