House prices soar across Australia, Sydney and Melbourne lead charge

The latest Domain House Price Report for the June quarter revealed Sydney's median house price surged 2.6%, the city's fastest growth in two years.

The NSW capital's sharp rebound has pushed its median house to a new record high of $1.72 million.

Melbourne followed closely, rising 2.3% to $1.06 million, a three-year high and now within striking distance of previous peaks.

Notably, Melbourne and Brisbane house prices are nearly identical, with units pulling down the average for Melbourne, signalling a more densified city. 

Across the combined capitals, the median house price stood at $1.21 million in the June quarter.

"[Melbourne property market's] recovery now sets the stage for a return to record prices by mid-2026," said Dr Nicola Powell, Domain's chief of research and economics.

Property price growth in the two east coast capitals had notably cooled in previous years, marked by sustained declines and modest, incremental gains.

Domain data from June 2022 recorded a 0.9% quarterly dip in Melbourne house prices, marking the first back-to-back quarterly drop since the 2018-19 downturn.

In the same period, Sydney also saw house prices decline for the first time in two years.

Domain attributes the reacceleration to the Reserve Bank of Australia's recent shift into an easing cycle.

"Lower interest rates have unlocked borrowing capacity, increased demand, and breathed new energy into housing markets nationwide," Dr Powell said.

With the RBA widely expected to cut rates again in August, following a surprise hold in its July meeting, experts forecast that the upcoming spring selling season will be marked by stronger buyer demand.

Previous top-performing markets ease

Brisbane, Adelaide, and Perth also posted new highs, though house price momentum is notably tapering across Australia's mid-tier growth capitals.

"Adelaide's quarterly gains have dropped to just over a two-year low. Brisbane's pace, though still solid, has dropped to roughly half last year's rate, and Perth's is a mere quarter of the gain seen in the same quarter last year," Dr Powell said.

Despite the easing, Domain maintains that early action may still offer value opportunities, especially in cities like Perth, which remains about $45,000 shy of crossing the $1 million threshold.

Brisbane and Adelaide, on the other hand, are now well into the $1 million club, with median house prices at $1.06 million and $1.01 million, respectively.

"The housing market continues to outperform expectations, despite cost-of-living concerns and economic uncertainty," Dr Powell said.

Source: Domain

Units outperform houses

As house prices climb, more buyers are turning to units, pushing national median unit price to a new high of $689,588.

Record prices were noted in Sydney, Brisbane, Adelaide, and Perth.

Brisbane, particularly, is experiencing its "longest-ever" run of unit price growth, with values rising for 17 consecutive quarters, according to Domain.

The Queensland capital now ranks as Australia's second most expensive city for units, behind only Sydney, which has held the top spot for the past year.

Still, the pace of unit price growth in Brisbane has slowed, falling to nearly half the rate seen in the same quarter a year ago.

Quarterly growth, meanwhile, was led by Darwin and Canberra, where unit prices rose to 5.6% and 4.6%, respectively.

"Units in rising regional markets and smaller capitals offer strong rental yields with rising capital growth - an increasingly rare combination in today's market," Dr Powell said.

Source: Domain

Rising prices defy broader headwinds

Domain notes the housing market continues to defy expectations, growing in the face of subdued consumer sentiment and stretched affordability due to high interest rates and cost-of-living pressures.

Even if the expected RBA rate cut is delivered next month, Dr Powell said limited housing supply will continue to drive upward pressure on prices.

"Next month's RBA decision will be one to watch - another rate cut could expand borrowing capacity, though regulators may tread carefully if investor activity accelerates," she said.

"Supply remains the key wildcard. We're still not building fast enough to meet population growth. Without a substantial boost in new housing, price pressures will remain, regardless of further rate cuts."

APRA announced it is keeping its mortgage buffer rate at 3% however hinted at potential extra regulation should property prices rise strongly again.