House prices to rise by 3.3 per cent, units by 4.6 per cent in 2025
By Graeme Salt
House prices will rise nationally by 3.3 per cent over the next 12 months but a stronger 6 per cent in 2026, KPMG’s latest 6-monthly property report on Australia’s capital cities finds.
The Residential Property Market Outlook finds unit (apartments and townhouses) prices will gain by 4.6 per cent in 2025 and then 5.5 per cent the following year, as they represent a more realistic route into the housing market, given the ongoing affordability crisis.
Overall, house price growth this year will be down on 2024, which saw an average 5.1 per cent rise nationally, while unit price growth will be largely consistent with last year’s average 4.5 per cent rise. Price growth will be more pronounced in the second half of 2025, aligning with the interest rate cuts KPMG believes will start by the end of the second quarter.
City by city price growth forecasts over the next two years
For houses this year there will once again be some regional variation with Perth house prices rising by 4 per cent but Darwin seeing only 1.2 per cent growth. Canberra and Melbourne will be solid performers on 3.5 per cent growth each, with Sydney a more restrained 3.3 per cent, Brisbane 3.1 per cent, while Adelaide and Hobart are expected to be lower on 2 per cent and 1.8 per cent respectively.
House | Unit | |||
Dec 2025 | Dec 2026 | Dec 2025 | Dec 2026 | |
Sydney | 3.3% | 7.8% | 5.0% | 6.1% |
Melbourne | 3.5% | 6.0% | 4.7% | 7.1% |
Brisbane | 3.1% | 5.6% | 4.1% | 3.3% |
Adelaide | 2.0% | 3.6% | 4.6% | 3.1% |
Perth | 4.0% | 4.6% | 5.0% | 5.0% |
Hobart | 1.8% | 2.7% | 4.0% | 4.2% |
Darwin | 1.2% | 2.5% | 3.8% | 2.7% |
Canberra | 3.5% | 3.5% | 4.0% | 3.9% |
In 2026, where house price growth will be higher, Sydney will reclaim top spot on 7.8 per cent, with Melbourne and Brisbane next in line on 6.0 per cent and 5.6 per cent respectively.
Units
One of the key trends identified in the report as emerging in the housing market is unit prices being expected to modestly outpace house prices over the next two years.
The shift will be largely driven by ongoing affordability constraints, particularly in capital cities, where the escalating prices of detached houses have left a large portion of the population priced out of the market. As a result, there will be growing demand for units, as a more affordable housing option. Attached dwellings offer relatively lower entry points compared to houses, making them more viable options for a larger pool of buyers, the report finds.
For units, the predicted increases for 2025 range from Sydney and Perth’s 5 per cent growth to Darwin’s 3.8 per cent. In 2026, Melbourne at 7.1per cent and Sydney at 6.1 per cent will see the strongest growth.
Dr Brendan Rynne, KPMG Chief Economist, said: “While 2024 was a year of high interest rates and inflation and subdued consumer sentiment, the housing market withstood all those factors and still provided strong price growth, due to demand outstripping supply. Even the much-anticipated ‘fixed-rate cliff’ – the transition of mortgage holders off lower fixed rates to higher variable rates – had only had a mild impact and households generally coped well with the rate rises, due to a robust labour market and Australia’s historic low unemployment rate.”
Graeme Salt is an award-winning mortgage broker. For a no-obligations consultation on your home loan needs, please contact him on 02 9922 5055.
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