National dwelling values surged 1.1% in October, marking the strongest monthly gain since June 2023 and pushing the annual growth rate to 6.1%.
The latest Cotality figures are the first to gauge the effect of the federal government's expanded 5% Deposit Scheme for first homebuyers, which kicked in on 1 October.
The data shows value growth has been strongest in the broad middle and lower quartile of the market, rising 1.4% and 1.2% respectively across the combined capital cities in the past month.
This reflects the areas where there is typically the most activity from first homebuyers and investors with new investment lending at near record levels.
Cotality's research director Tim Lawless said the pace in price growth has been gaining momentum since the RBA's cash rate cut in February.
"Before the February rate cut, housing conditions were losing momentum, even recording flat to falling values through late 2024 and January 2025," he said.
"The first rate cut in February marked a clear turning point with home values moving through a positive inflection across most regions and gathering steam since then."
So much for rate cuts
In dollar terms, the 1.1% monthly gain in the combined capital cities equates to rise of just over $10,000 in the median dwelling value in October alone.
Since February, it has increased by $53,700.
The gain effectively wipes out the boost to borrowing capacity from the 75-basis points of rate cuts in 2025 for some borrowers, Cotality analysis found.
See also: Home Loan Borrowing Power Calculator
Its modelling shows a household on the median income has seen a boost of around $51,000 to their borrowing capacity through rate cuts, allowing for cost-of-living expenses and the current 3% serviceability buffer.
For those not in the market, that gain has already been overtaken by the rise in home values.
"With interest rates potentially at or near the end of their cutting cycle, we aren't likely to see a material boost to borrowing capacity from here," Mr Lawless said.
See also: Inflation numbers mean no interest rate cuts until well into 2026: economists
Gains across the board
The Cotality data shows every capital city and rest of state region recorded a monthly rise in value in October.
| Monthly | Annual | Median value | |
| Sydney | 0.7% | 4.0% | $1,256,156 |
| Melbourne | 0.9% | 3.3% | $818,975 |
| Brisbane | 1.8% | 10.8% | $992,864 |
| Adelaide | 1.4% | 6.7% | $867,681 |
| Perth | 1.9% | 9.4% | $884,471 |
| Hobart | 0.3% | 2.4% | $686,262 |
| Darwin | 1.6% | 15.4% | $564,473 |
| Canberra | 0.6% | 3.2% | $877,937 |
| Combined capitals | 1.1% | 5.6% | $959,526 |
| Combined regionals | 1.0% | 7.5% | $710,573 |
| National | 1.1% | 6.1% | $872,538 |
Source: Cotality Home Value Index results as at 31 October 2025
Perth is once again leading the charge with a 1.9% monthly jump in home values, followed by Brisbane (1.8%), Darwin (1.6%), and Adelaide (1.4%).
Those markets, along with Sydney's, are at their peak as are all regional rest of state markets apart from regional Victoria and regional Northern Territory.
See also:
- Perth Suburbs to Watch 2026
- Brisbane Suburbs to Watch 2026
- Sydney Suburbs to Watch 2026
- Melbourne Suburbs to Watch 2026
Cotality said there are many factors contributing to stronger housing conditions but ultimately the uptick in growth is reflective of supply falling well short of demand.
Rents back on the rise too
With national rental vacancy rates holding around record lows of 1.4% last month, rental growth is once again pushing higher.
On a seasonally adjusted basis, Cotality's national rental index has risen by 0.5% per month over the past three months, the highest monthly growth in rents since May 2024.
After slowing through 2024, the annual trend in rental growth is once again on the upswing across most cities, led by Darwin where rents are up 8.5% over the past year and Hobart at 6.9% higher.
Although rents are reaccelerating, housing values are rising faster, placing renewed downward pressure on gross rental yields.
The gross rental yield across the capital cities is at its lowest level in three years at 3.40%.
It is higher across regional markets at 4.33%, although this too is the lowest figure since October 2022.
See also: Top Australian Suburbs for Rental Yield 2025
Darwin and regional Northern Territory are recording by far the highest gross yields in the country at 6.4% and 7.9%, respectively.
ABS lending data shows investment housing loans have more than doubled in the Northern Territory over the past financial year.
It's likely the NT government's $50,000 Home Buyer Grants are playing a role.
See also: Northern Territory First Home Owner Grant explained
What is the outlook?
Cotality notes there are "a lot of moving parts" currently influencing the housing market, underscored by persistently low levels of supply and above-average levels of demand.
It said this imbalance is likely to persist for some time.
But with rekindled inflation, Australia is also facing the prospect of a shallower rate-cutting cycle, which may add to affordability challenges and lower consumer sentiment.
The RBA's Monetary Policy Board is meeting on Monday and Tuesday, 3-4 November, amid virtually no expectation of a cash rate cut.
Cotality has also flagged a tightening of investor credit policies could be a looming downside risk for housing markets.
RBA data to August shows investor credit growth is rising at its fastest pace since June 2015.
The last time investor lending reached such levels, regulators stepped in curb growth in investor loans.
See also: Investor home loans narrow rates gap
Given investors currently comprise 38% of home loan demand, tighter conditions on this segment of the market may also serve to cool housing demand.
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