Where Are the Booming Markets in 2025?
National Market Overview
The national housing market recorded the strongest month-to-month gain since May 2024, rising 0.7% in August 2025 and 7% over the past 12 months for the combined capital cities.
Over the past 12 months, Darwin has led national growth with a 10.9% value gain and a 5.8% rental yield (17.6% total return) for houses, and an 8.8% value gain and 7.9% rental yield (16.7% total return) for units.
These developments demonstrate that Darwin’s housing market has turned a corner: with current stock 37.4% below the long-term trend, a tight vacancy rate of 0.5%, and attractive rental yields, Darwin has likely entered a growth phase and may have a good run in the years to come.
Perth, Adelaide, and Brisbane continue their growth momentum, delivering total returns of 10%, 9.9%, and 10.7% for houses, and 15%, 12.3%, and 15.6% for units over the past 12 months.
The combination of strong migration inflows and a shortage of new housing completions have put upward pressure on prices, reinforcing these cities’ positions as some of the highest-performing markets in the country.
Hobart continued near the bottom, with only a 2.8% gain for houses and a 1.5% gain for units over the past 12 months. Price pressures remain subdued due to weak demand and fragile economic performance.
Canberra recorded only a 2.1% gain for houses and a 0.1% decline for units in the past 12 months, reflecting weak demand partly influenced by policy changes, government employment trends, and soft economic conditions.
Summary of property performance: Houses, September 2025
| Capital City | Median House Price (‘000) | 3 Months % Growth | 12 Months % Growth | Rental Yield: House (last 12 months) | Total Return: House (last 12 months) | |
| Sydney | $1,707 | 2.0% | 2.9% | 2.6% | 5.5% | |
| Brisbane | $1,131 | 2.9% | 7.3% | 3.4% | 10.7% | |
| Melbourne | $1,051 | 1.3% | 2.1% | 3.5% | 5.2% | |
| Canberra | $983 | 1.9% | 2.1% | 3.1% | 5.8% | |
| Perth | $948 | 3.1% | 6.3% | 3.7% | 10.3% | |
| Adelaide | $945 | 2.1% | 6.4% | 4.0% | 9.9% | |
| Hobart | $773 | -0.7% | 2.8% | 4.3% | 7.1% | |
| Darwin | $615 | 6.1% | 10.9% | 5.9% | 16.8% |
Summary of property performance: Units, September 2025
| Capital City | Median Unit Price (‘000) | 3 Months % Growth | 12 Months % Growth | Rental Yield: Unit (last 12 months) | Total Return: Unit (last 12 months) |
| Sydney | $925 | 0.9% | 0.0% | 4.1% | 4.1% |
| Brisbane | $716 | 3.9% | 11.1% | 4.4% | 15.5% |
| Adelaide | $692 | 2.0% | 7.7% | 4.5% | 12.2% |
| Melbourne | $633 | 0.2% | -0.4% | 4.8% | 4.4% |
| Canberra | $616 | 0.1% | -0.1% | 5.3% | 5.2% |
| Perth | $606 | 3.0% | 10.0% | 5.5% | 15.5% |
| Hobart | $587 | 0.1% | 1.5% | 4.8% | 6.3% |
| Darwin | $374 | 2.5% | 8.8% | 7.9% | 16.7% |
Rental Market Conditions
The rental market remains tight, driven by historically low vacancy rates and continued strong demand from population growth, particularly fueled by overseas migration.
The national vacancy rate is currently at 1.2%, far below the healthy level of around 3%. Vacancy rates in Darwin, Hobart, Perth, Adelaide, and Brisbane are all below 1%, indicating strong housing demand and that supply is struggling to keep up.
The combination of stagnant housing supply and high demand suggests that rents will continue to rise, and vacancy rates will stay low for a while, particularly in markets with strong population inflows and limited housing supply.
The cash rate
The Reserve Bank of Australia (RBA) kept the cash rate on hold at 3.6% at its September 2025 Board meeting. The decision was based on dynamics in private consumption and the labour market. Private consumption is picking up as real household incomes rise. Various indicators suggest labour market conditions remain tight. Growth in employment has slowed slightly more than expected, but the unemployment rate was unchanged at 4.2% in August, while the normal unemployment rate is around 4.5%.
Despite this pause, the current cash rate is 0.75% lower than at the start of this year, following cuts in February, May, and August. Most lenders have fully passed these cuts on to customers, injecting more liquidity into the property market and broader economy.
Looking ahead, the current cash rate of 3.6% is higher than the estimated long-term neutral cash rate of 3%. This suggests there is room for further cuts in November 2025 and in 2026.
The 5% Deposit Scheme
A welcome policy that started on 1st October 2025 is the 5% Deposit Scheme, which allows eligible buyers purchase the first home with 5% deposit while avoiding Lenders Mortgage Insurance (LMI). Housing Australia provides a guarantee to the lender—up to 15% of the property value—so the loan effectively looks like it has a 20% deposit, reducing upfront costs.
This new policy also comes with major upgrades: unlimited places, removal of income caps, and higher property price caps (e.g., NSW capital city/regional centres up to $1.5 million; ACT up to $1.0 million). Applicants still need at least a 5% genuine deposit and must buy to live in the home.
With approximately 120,000 first-home buyers and 1 in 3 already taking up the previous First Home Guarantee Scheme, uptake is projected to increase significantly—to up to 1 in 2 (50%)—equivalent to as many as 60,000 buyers per year.
As a result, demand is expected to increase, especially in affordable segments where most first-home buyers can purchase, creating flow-on effects to more expensive segments and overall markets
Beyond new policy developments, the housing market will be driven by tight supply and high population growth.
Population growth: The national population is projected to increase by around 500,000 in 2025. Although lower than last year, it remains above the long-term average of approximately 350,000 to 400,000. This will continue to drive housing demand—particularly in large metropolitan areas. More newly arrived migrants are expected to be drawn to Perth, Adelaide, and Brisbane due to relative affordability.
Housing supply: Nationally, around 240,000 new dwellings are needed annually to keep pace with population growth, yet only about 170,000–180,000 are being delivered each year. Pressure will be highest in tight housing markets, including Darwin, Perth, Adelaide, and Brisbane.