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Home prices keep climbing. What’s behind the surge?

Australian home prices are up 7.7% this year, with Perth and Darwin leading the charge as tighter lending rules loom.

1 December 2025

Auctioneer Jesse Davidson presides over a property auction in Homebush. Picture: AAP

Key takeaways

  • Home prices lifted 1% in November, slightly slower than October’s 1.1%.
  • Prices are now 7.7% higher in 2025, beating earlier forecasts.
  • Perth saw the biggest monthly jump at 2.4%, while Darwin surged 17% over the year.

Why are prices still climbing?

Australian home prices continued their upward march in November, rising 1 per cent nationally. That’s a touch slower than October’s 1.1 per cent increase, but it pushes year-to-date growth to 7.7 per cent - well above expectations.

The market remains a tale of two speeds. Perth and Darwin are powering ahead, while Sydney and Melbourne lag. Perth prices jumped 2.4 per cent last month, and Darwin has soared 17 per cent over the past year. By contrast, Sydney managed just 0.5 per cent and Melbourne 0.3 per cent in November.

Dwelling price growth November 2025

What’s driving the surge?

“Momentum has been stronger than expected, driven by investor demand and tight supply,, Commonwealth Bank Head of Australian Economics Belinda Allen said.

“While new lending limits starting in February 2026 may act to cool activity, other factors, like the first home buyer deposit scheme and low listings, will keep pressure on prices.”

Investor activity has picked up, and listings remain well below five-year averages in Perth, Brisbane and Adelaide. Meanwhile, auction clearance rates have softened in Sydney and Melbourne, adding to their slower growth.

AUction clearance rates November 2025

What’s changing for borrowers?

From 1 February 2026, the Australian Prudential Regulation Authority (APRA) will cap high debt-to-income loans – those where debt is six times income or more – at 20 per cent of new lending. The move aims to reduce financial risks as credit growth accelerates.

What’s next for the market?

Economists expect competing forces ahead. Talk of interest rate hikes could cool demand, but affordability incentives and limited supply remain tailwinds. Regional areas are also outperforming capital cities, rising 1.1 per cent in November compared to 1 per cent in capitals — and 8.6 per cent over the year versus 7.1 per cent.

See Belinda Allen’s full analysis: Home prices, lending and credit – an update

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The information presented is an extract of a Global Economic and Markets Research (GEMR) Economic Insights report. GEMR is a business unit of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945.



This extract provides only a summary of the named report. Please use the link provided to access the full report, and view all relevant disclosures, analyst certifications and the independence statement.



The named report is not investment research and nor does it purport to make any recommendations. Rather, the named report is for informational purposes only and is not to be relied upon for any investment purposes.



This extract has been prepared without taking into account your objectives, financial situation (including your capacity to bear loss), knowledge, experience or needs. It is not to be construed as an act of solicitation, or an offer to buy or sell any financial products, or as a recommendation and/or investment advice. You should not act on the information contained in this extract or named report. To the extent that you choose to make any investment decision after reading this extract and/or named report you should not rely on it but consider its appropriateness and suitability to your own objectives, financial situation and needs, and, if appropriate, seek professional or independent financial advice, including tax and legal advice.