Melbourne’s real estate market is experiencing a “decisive recovery,” according to property portal Domain, with the city hitting a new record for its median house price for the first time in four years. This development comes as national house prices have risen for a 12th consecutive quarter, marking “the longest uninterrupted growth cycle since 2012-2015,” as noted in Domain’s December Quarter House Report.
Domain reports that Melbourne has “clearly re-entered a sustained growth phase,” contributing to a 7.4 percent increase in house prices in 2025. Meanwhile, warnings have emerged about Sydney’s property market potentially becoming even more expensive, with a $2 million median price tag “conceivable” within two years.
Six Capitals Now in the Million-Dollar Club
The Domain report highlights that house prices in all capital cities, except Canberra, are now at their highest-ever levels. Prices grew by a combined 3.9 percent in the December quarter across the country, resulting in a 9.6 percent spike in 2025, totaling $111,728. Australia now boasts six capital cities with a median house price of over $1 million, as Perth joined the seven-figure club for the first time, driven by the nation’s fastest growth at the end of 2025.
Perth now stands alongside Sydney, Melbourne, Brisbane, Adelaide, and Canberra with median prices above $1 million. In the Victorian capital, house prices rose by an average of $31,614, or 2.9 percent, in the December quarter, reaching $1,111,084. Brisbane and Adelaide also experienced double-digit annual increases, with Brisbane’s growth described as “historic.”
Brisbane’s median house price is now $1,171,237, compared to $1,033,999 just a year earlier, following a 4.5 percent climb in the December quarter and an annual change of 13.3 percent.
Adelaide, joining the million-dollar club in 2025, isn’t far behind at $1,094,427, up from $978,174 in December 2024, after a 5 percent quarterly leap, resulting in an 11.9 percent increase over 12 months. In Darwin, house prices surged 22.4 percent to a median of $690,896, up from $564,581 in December 2024, which included a 3.3 percent rise in the December quarter.
Sydney’s Modest Gains Amidst National Growth
Despite the national surge, Sydney recorded the slowest growth among major cities over the last three months of the year. Sydney’s quarterly rise was just 2 percent, or 6.4 percent annually. However, the city’s median unit prices rebounded in the December quarter. While Sydney’s annual rise was only 3.2 percent, a 2.1 percent increase in the last three months of 2025 gave it new momentum for its strongest growth in units since mid-2023.
“We’re seeing buyers gravitate towards units in Sydney, Melbourne, and Brisbane in search of relative value, while smaller capitals like Perth and Adelaide are leading the charge on house price growth,” said Domain’s chief of research and economics, Nicola Powell.
Canberra was the only major city to record a quarterly fall for home units, even though its median house price rose 3.6 percent to nearly $1.4 million, the highest level in two years. Canberra’s home unit prices saw a second consecutive quarterly decline, falling by 1.3 percent to a median of $611,466, now 2.3 percent down from their peak in September 2023.
The combined median home unit price for Australia’s capital cities grew by 3.5 percent to $722,811 in the December quarter, marking a 6.8 percent increase from a year earlier.
“This momentum continues to be supported by improved borrowing capacity following the three interest rate cuts delivered in 2025, alongside tight housing supply, a resilient labor market, and solid wage growth,” Ms. Powell added. “Buyer confidence is up, and the expansion of the home guarantee scheme last October has played a role in creating the greater momentum we’ve seen.”
Future Projections and Market Dynamics
Sydney remains Australia’s most unaffordable real estate market. Even with its relatively modest rises, Sydney’s median house price edged closer to the $2 million mark, adding $34,177 in the December quarter to nearly $1.76 million. Its median home unit price of $844,390 was more than $100,000 higher than its closest competitor, Brisbane, at $770,471.
Ms. Powell predicted that Sydney could breach the $2 million mark within two years, given the current market trajectory.
Perth’s rise is described as “extraordinary,” particularly when compared to Melbourne since the COVID-19 pandemic. Alongside an 18.4 percent annual rise in median house prices, Perth’s home units jumped 7.4 percent in the December quarter, culminating in a 17.8 percent climb for the year.
“Back in 2019, Perth house prices were 42 percent cheaper than Melbourne, but now that gap is only 2 percent after an extraordinary period of catch-up,” Ms. Powell said. “This is due to strong demand in Perth, with many people moving to Western Australia — not just from overseas, but we’ve also seen net interstate migration.”
Once considered affordable, Perth and Adelaide have joined the million-dollar club in the past 12 months, challenging previous perceptions. Ms. Powell expects Brisbane real estate to continue being sought after in the lead-up to the 2032 Olympics and Paralympics, having been the best home unit performer in 2025 and the second-best in terms of house price rises.
“But the pace of growth could slow down in other cities, with at least two interest-rate hikes predicted for 2026,” she cautioned.
