National home values rose by 4.9% over the past 12 months. The growth rates varied significantly across the capital cities, which highlight the diverse economic and demographic conditions influencing each local market, as well as the ongoing shifts in housing demand, supply and affordability throughout the country.
Houses: Divergent Performance Across Cities
Over the 12 months, Melbourne and Hobart recorded declines in house values:
- Melbourne: recorded a -2.9% decrease, largely attributed to higher supply levels and new taxes that dampened investor activity.
- Hobart: experienced a -0.5% drop, reflecting a softening phase following the city’s strong growth cycle in previous years.
At the other end of the spectrum, three mid-sized capitals have performed strongly:
- Perth: House values surged by 18.7%, backed by mining-sector performance, strong interstate migration, and affordable housing prices relative to the eastern states. The city’s ongoing housing supply constraints have also fueled price growth.
- Adelaide: Rose by 12.5%, benefiting an influx of new residents seeking affordable property prices and strong employment prospects. The city’s relatively lower median house price compared to Sydney and Melbourne has been a strong attraction for both first-home buyers and investors.
- Brisbane: Increased by 10%, supported by high levels of interstate migration and large infrastructure projects that create tens of thousands of jobs in the years to come.
From a total-return perspective—which combines capital growth and rental yields—Perth leads at 22.7%, followed by Adelaide at 16% and Brisbane at 13.6%.
Investing in these three cities has delivered exceptional returns for investors, with returns of $227,000 in Perth, $160,000 in Adelaide and $136,000 in Brisbane for a $1million house.
Units: Value Declines in Large Cities
While overall, national unit prices continue to increase in value, the performance is greatly different between capital cities:
- Melbourne: -3%
- Canberra: -2.9%
- Hobart: -1.3%
- Darwin: -0.5%
Conversely, mid-sized cities continued to perform strongly:
- Perth: +22.7%
- Adelaide: +16.9%
- Brisbane: +16.6%
Units in Sydney continued to rise due to limited housing supply in the city:
- Sydney: +1.8%
In the three mid-sized markets, the combination of rising unit prices and high rental yields has pushed total returns to remarkable levels.
Perth tops the chart at 28.2%, followed by Adelaide at 21.6% and Brisbane at 21.1%. These figures underscore the appeal of more affordable property segments, where both local and interstate investors bet on strong long-term potential.
Summary of property performance: Houses, January 2025
Capital City | Median House Price (‘000) | Median House Price: 12 Months % Growth | Rental Yield: House (last 12 months) | Total Return: House (last 12 months) | Total Returns: $ (last 12 months) |
Sydney | $1,686 | 2.5% | 2.7% | 5.2% | $87,672 |
Melbourne | $1,038 | -2.9% | 3.2% | 0.3% | $3,144 |
Brisbane | $1,106 | 10.2% | 3.4% | 13.6% | $150,416 |
Adelaide | $898 | 12.5% | 3.5% | 16.0% | $143,680 |
Perth | $950 | 18.7% | 4.0% | 22.7% | $215,650 |
Canberra | $992 | 0.4% | 3.7% | 4.1% | $41,672 |
Hobart | $748 | -0.5% | 4.2% | 3.7% | $27,676 |
Darwin | $583 | 1.4% | 6.0% | 7.4% | $43,142 |
Summary of property performance: Units, January 2025
Capital City | Median Unit Price (‘000) | Median Unit Price: 12 Months % Growth | Rental Yield: Unit (last 12 months) | Total Return: Unit (last 12 months) | Total Returns: $ (last 12 months) |
Sydney | $908 | 1.8% | 4.0% | 5.8% | $52,664 |
Melbourne | $651 | -3.0% | 4.8% | 1.8% | $11,718 |
Brisbane | $654 | 16.6% | 4.5% | 21.1% | $137,340 |
Adelaide | $634 | 16.9% | 4.7% | 21.6% | $136,944 |
Perth | $634 | 22.7% | 5.5% | 28.2% | $178,788 |
Canberra | $634 | -2.9% | 5.1% | 2.2% | $13,948 |
Hobart | $581 | -1.3% | 4.8% | 3.5% | $20,335 |
Darwin | $349 | -0.5% | 7.9% | 7.4% | $25,826 |
Rental Market Conditions: Tight Supply and Growing Demand
Over the past year, the national rental value index increased by 4.8%, slightly outpacing historical averages at 3%. However, in high price markets such as Sydney and Melbourne—where house prices rose more quickly than rents—rental yields have dropped to 2.7% and 3.2%, respectively.
Australia faces a critical housing shortage due to strong population growth. Vacancy rates have dropped between 1% and 2% – well below the 3% – typically considered a “healthy” market. This supply-demand imbalance is likely to persist into 2025, fueled by high immigration levels and restrained construction activity.
Vacancy Rates (January 2025)
- Adelaide: 0.5%
- Perth: 0.7%
- Brisbane: 1.0%
- Sydney: 1.5%
- Melbourne: 1.7%
- Canberra: 1.7%
- Hobart: 0.6%
- Darwin: 1.7%
Key Drivers for 2025
- Population Growth: The national population is projected to increase by over 500,000 in 2025. Although this figure is lower than last year, it remains above the long-term average and will continue driving housing demand—particularly in large metropolitan areas. More newly arrived migrants are expected to be drawn to Perth, Adelaide, and Brisbane due to their relative affordability.
- Interest Rate: Many big banks and economists predict interest rate will be cut by 25 to 75 basis points by mid-2025, thanks to favorable inflation trends. Lower rates are likely to boost borrowing capacity, improve housing affordability, and stimulate property price growth.
- Housing Supply: Nationally, around 240,000 new dwellings are needed annually to keep pace with population growth, yet only about 170,000 are being delivered each year. This shortfall is especially pronounced in Perth, Adelaide, and Brisbane, driving up prices in these markets. In contrast, Sydney and Melbourne may experience more moderate price pressures due to relatively balanced supply and demand, coupled with affordability constraints that slow the pace of growth.
Overall, Australia’s property market in 2025 is painted by a blend of high demand, constrained supply, and shifting migration patterns to mid-sized capital cities. While Sydney and Melbourne are still the largest housing markets, the rise of Perth, Adelaide, and Brisbane as high-growth investment destinations has demonstrated the fast-changing dynamics in the housing market.
Case Study – Extraordinary Growth in Adeliade
Our internal data and research identified Adeliade as a city primed for growth a number of years ago. We undertook intensive due diligence and identified a number of locations and properties that would deliver superior returns for our clients. One such opportunity was a multi-stage townhome development in a lifestyle location. inSynergy advised and assisted clients to secure properties in this development off-plan. These properties have delivered impressive results, with an average capital growth of $300,000 between purchase and settlement (2.5 years). During this time, clients received the capital growth without having any holding costs. Additionally, tenancies were secured upon settlement, providing a remarkable 6% long-term rental yield.
📍 Location: Adelaide, SA
🏠 Property Type: 3 Bed, 3.5 Bath, 1 Car Townhouse
📅 Purchase Date: May 2022
💰 Initial Investment: $915,000
📈 Current Valuation: $1,225,000
Thanks to these achievements, our clients have enhanced cash flow and are now well-positioned to continue expanding their property portfolios.