UPDATE: Australian home prices surged by 1.1% in October 2025, marking the fastest monthly growth since June 2023. This surge adds over $10,000 to the median dwelling value, which now stands at $929,495, as reported by CoreLogic.
This latest development signals a significant shift in Australia’s housing market, driven by a combination of lower interest rates, severe supply shortages, and record immigration. With demand outstripping supply, homeowners are witnessing their property values skyrocket, while first-time buyers face an increasingly daunting market.
October’s growth is not just a blip; it’s a clear indicator that we’re entering a new property growth cycle. Since February’s first rate cut, dwelling values across capital cities have risen by approximately 5.9%, or about $53,700. For homeowners, this means substantial equity gains, but for many aspiring buyers, it deepens the affordability crisis.
All capital cities experienced price increases, with Perth leading the charge at 1.9%, while Hobart recorded a more modest 0.3% gain. The combination of lower interest rates—down from a peak of 4.35%—and an ongoing supply crisis has created a perfect storm for rising home prices.
“October 2025 will be remembered as the month Australia’s housing market officially shifted into high gear,” said a CoreLogic analyst.
Despite the excitement for current homeowners, this rapid growth raises concerns. Experts warn of a “government-backed property bonanza” as new first home buyer programs flood the market without a sufficient increase in housing supply. Prime Minister Anthony Albanese has recently scrapped income caps on first home buyer programs, allowing virtually unlimited participation, thus intensifying competition in an already strained market.
The ongoing population boom, which surged to a record 660,000 last year due to immigration, further complicates the situation. This growth necessitated around 250,000 new homes, but only about 170,000 were completed, resulting in an alarming shortfall of 80,000 homes in just one year.
As prices continue to climb, the total value of residential real estate in Australia has reached an unprecedented $11.8 trillion, increasing by $678 billion over the past year. While this wealth accumulation benefits current property owners, it starkly highlights the widening gap for those trying to enter the market.
For renters, the outlook is equally troubling. A recent report suggests that median apartment rents could rise by 24% between 2025 and 2030 across Australian capitals, with annual increases expected to average 5%, significantly outpacing wage growth.
Given these conditions, analysts predict that Australian home prices may continue to rise by 4-5% annually over the next three years, despite affordability challenges that could temper any sharp acceleration. Some experts are even suggesting we are at the onset of a new property “supercycle,” a period of prolonged growth rather than a fleeting boom.
For those already in the property market, this surge is a cause for celebration. However, prospective buyers are advised to act quickly. Every month of delay translates to higher prices and a greater challenge in achieving homeownership. The current conditions present both opportunities and risks, emphasizing the critical importance of location selection for investors.
In summary, the Australian housing market is heating up, defying expectations of a slowdown. As we move further into 2026, the potential for continued price growth remains high unless significant economic changes occur. October 2025 marks a pivotal moment as the next property boom appears to be underway, reshaping the landscape for both homeowners and buyers. The urgency to adapt to these changes is clear, making it a critical time for all involved in the housing market.
