Sydney and Melbourne house values dip on rate fears
Finally, the combination of high house prices and the prospect of interest rate cuts may be taking some steam out of the nation’s property market.
House values in Sydney and Melbourne fell in December amid signs the combination of increasingly unaffordable homes and the prospect of a new year interest rate rise have hit the nation’s two largest property markets.
Figures compiled by property data firm Cotality show house values fell by 0.3 per cent in Sydney and 0.1 per cent in Melbourne last month. It was the first time since January last year that value in the two cities had fallen.
House values eased for the first time in a year in Sydney and Melbourne.Credit: Dion Georgopoulos
Sydney’s median house value, despite last month’s easing, still stands at almost $1.6 million while in Melbourne the figure is $981,165.
While the two largest markets eased, values lifted in every other capital, led by a 2.1 per cent jump in Darwin, where the median house value is now $697,251. Values lifted by 1.9 per cent in Perth (to $983,068) and Adelaide ($960,051) while there was a 1.5 per cent increase in Brisbane ($1,131,329).
Cotality research director Tim Lawless said it appeared home values were likely to show modest but uneven growth in 2026, much hinging on the supply of new properties and the actions of the Reserve Bank.
“Renewed speculation that the rate-cutting cycle is over and the next move from the RBA could be a hike has dented housing confidence,” he said.
“A ‘higher for longer’ setting on interest rates, alongside a resurgence in cost-of-living pressures and worsening affordability pressures, looks to have taken some heat out of the market.”
The figures cast doubt on claims made by some property experts and the Coalition that the government’s 5 per cent home deposit scheme – which was widened to all first-time buyers from October 1 – has driven up prices.
Since the expanded scheme started, home value growth has eased in most markets.
Over last year, house values grew fastest in Darwin, at 19.9 per cent, while units in the city lifted by 17 per cent. Brisbane (14 per cent) and Perth (15.7 per cent) both experienced double-digit growth in house values.
Sydney’s house values lifted by 6.9 per cent last year, while Melbourne recorded the national low, at 5.4 per cent.
For 2025, Cotality’s measure of national median dwelling value grew by 8.6 per cent or $71,400.
It was the strongest calendar year since 2021, when values jumped by 24.5 per cent, which was the biggest annual increase in a generation.