Australian home prices surged to fresh record highs in August, driven by rising buyer demand, constrained supply, and the Reserve Bank’s rate-cutting cycle—marking the seventh consecutive monthly gain for national housing values.

According to housing analytics firm Cotality, national home prices rose 0.72% in August—the strongest monthly increase since May 2024—pushing the median national dwelling value to $848,858. The lift in August outpaced July’s 0.55% gain and took annual growth to a five-month high of 4.1%, up from 3.78% in July.

Capital cities lead the charge

Across the combined capital cities, prices rose 0.79% in August to a median of $932,038, also the fastest monthly gain since May 2024. While this was supported by growth in every city except Hobart, the mid-tier capitals are clearly driving momentum.

• Brisbane led the gains with a 1.2% increase, pushing dwelling values 7.9% higher over the year.

• Perth (up 1.1%) and Darwin (up 1.0%) also continued to show outsized strength, fuelled by low stock, high rental yields and relatively better affordability.

• Adelaide rose 0.9%, maintaining its status as a resilient performer in the current cycle.

Meanwhile, the country’s two largest cities recorded more modest growth:

• Sydney home values rose 0.8%, buoyed by improved borrowing capacity following the RBA’s mid-August rate cut.

• Melbourne, by contrast, managed only a 0.3% gain—making it the national laggard. Analysts point to higher investor tax burdens and weaker per capita income growth as factors weighing on the city’s performance.

Hobart was the only capital city to post a decline in August, with prices slipping 0.2%, continuing a subdued trend driven by softening demand and an unwinding of pandemic-era price growth.

Regional markets stay strong

Outside the capitals, regional Australia posted a 0.51% gain in August, taking prices 6.0% higher over the year to a median of $693,859. While overall performance was solid, the pace of growth varied widely by region.

The strongest monthly increases came from:

• South-East Tasmania (+2.1%)

• WA – Outback South (+2.0%)

• Regional WA (+1.0%)

• Queensland regional areas (+0.8%)

• Victoria regional areas (+0.6%)

At the same time, there were some clear pockets of weakness. Notable monthly declines occurred in:

• Regional NT – Outback (−0.8%)

• Southern Highlands & Shoalhaven, NSW (−0.8%)

• Melbourne – Inner South (−0.6%)

Over the 12-month period, price gains were especially pronounced in:

• WA’s Wheat Belt (+15.5%)

• Townsville, QLD (+15.2%)

Conversely, annual price falls were recorded in:

• Melbourne – Inner (−0.8%)

• North Sydney & Hornsby (−0.7%)

Supply squeeze, affordability shift

The ongoing imbalance between supply and demand continues to put upward pressure on prices. Total listing volumes fell again in August, now sitting 22.5% below the national 5-year average.

This shortage is most severe in:

• Brisbane

• Perth

• Adelaide

But now even Sydney and Melbourne, which previously had more balanced markets, are experiencing stock shortages—further contributing to rising prices.

The RBA’s three rate cuts in 2025 have clearly improved borrowing capacity. Paired with rising real wages and improved consumer confidence, these cuts are enabling more buyers to re-enter the market—especially first-home buyers and upgraders.

Rental market re-accelerates

The rental market showed renewed momentum in August, with advertised rents rising 0.5%—the fastest monthly gain since May 2024. Annual rent growth also ticked higher to 4.1%, following two straight months of reacceleration.

Low vacancy rates and population pressures continue to drive rental demand, particularly in cities with tight supply and limited new housing coming online. Cotality notes that “the re-acceleration in rental growth has been apparent through most of 2025.”

Building approvals fall short

New supply is not keeping pace with demand. The latest ABS figures show that building approvals fell 8.2% in July, sharply below market expectations.

• Detached house approvals rose 1.1% to 9,288

• Apartment & townhouse consents collapsed 22.3% to 5,943

This takes the annualised rate of approvals to 187,585, still well below the government’s 240,000/year target needed to hit its goal of 1.2 million new homes by 2029.

State-by-state breakdown (July):

• NSW: −24.6% (driven by a 38.2% collapse in multi-unit dwellings)

• QLD: +5.9%

• VIC: +0.7%

• WA: +11.8%

• TAS: +12.2%

• SA: −1.3%

The value of non-residential approvals also dropped sharply (−14.9%), while home renovation activity (alterations & additions) lifted modestly by 1.9%.

HIA economists suggest that demand is beginning to filter through to the new home market, and that building a home may become more attractive relative to buying established property—though capacity constraints remain a challenge.

What's next?

CBA economists continue to forecast national home prices will rise around 6% in 2025, supported by the RBA’s ongoing rate-cutting cycle, improving wages, and rising confidence. However, the bank warns that growth will likely be modest relative to past cycles due to affordability constraints and more gradual monetary policy easing.

At the same time, HIA economists suggest that stronger demand in the established home market is likely to spill into the new home market, as building a new home becomes a more attractive proposition.

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