UPDATE: Australian home prices surged by 1.1% in October 2025, marking the fastest growth in over two years. This sharp increase adds over $10,000 to the median dwelling value, pushing annual growth to 6.1% and signaling a significant shift in the housing market.
This rapid rise is driven by multiple factors, including lower interest rates, a severe supply shortage, and booming immigration rates. As a result, the median house price in Australia now stands at an alarming $929,495, making homeownership increasingly unattainable for many.
Across all capital cities, property values have risen, with Perth leading the charge at an impressive 1.9% monthly increase. Even Hobart, while modest at 0.3%, contributes to the overall upward trend. Since the first rate cut by the Reserve Bank of Australia in February, combined capital city dwelling values have skyrocketed by approximately $53,700.
The current market dynamics are alarming for potential buyers. With interest rates dropping from a peak of 4.35% and expected to fall further, the demand is intensifying. The recent introduction of government-backed incentives for first home buyers, allowing entry with a mere 5% deposit, is flooding the market with new buyers eager to capitalize on these favorable conditions.
“October 2025 will be remembered as the month Australia’s housing market officially shifted into high gear,”
stated a CoreLogic analyst. This sentiment is echoed by experts warning of a “government-backed property bonanza,” where expanded buyer programs are competing for limited supply, exacerbating affordability issues.
The supply crisis is critical, with new listings down by 7.6% from last year, reflecting a cumulative housing shortage of around 200,000 dwellings. The surge in immigration, which added 660,000 people last year alone, has created a demand for 250,000 new homes. Yet, only 170,000 were completed, resulting in a staggering shortfall of 80,000 homes.
As homeowners celebrate their rising wealth, the reality is dire for those entering the market. The upper quartile of the market is experiencing slower growth as wealthy buyers exercise caution amid economic uncertainty. Conversely, the lower-priced suburbs are seeing a surge in demand, driven by first home buyers eager to secure affordable options.
While analysts predict home prices will continue to climb by 4-5% annually over the next three years, affordability challenges remain a significant concern. CBRE forecasts a 24% increase in median apartment rents across capital cities by 2030, far outpacing wage growth.
As of now, Australia’s property market is valued at an unprecedented $11.8 trillion, reflecting a $678 billion increase over the past year. This wealth is concentrated among property owners, while the goalposts for aspiring homeowners move further away.
For potential buyers, swift action is crucial. The property market is heating up, and delays in purchasing could mean facing even higher prices. As the October surge demonstrates, many Australians are quickly realizing that the dream of homeownership is slipping further from reach.
As we enter the final months of 2025, all eyes will be on the housing market. The next steps will be critical as the government and economic forces continue to shape the landscape. With home prices likely to keep climbing, October 2025 may indeed mark the beginning of a new property boom in Australia.
