Housing Illusion: Feeling Down, Data Up?

The Market Feels Like It's Cooling, But Data Shows Soaring Prices! The Complete Truth About Australia's Real Estate Market

Walking into an auction, the competition no longer seems as fierce as it was at the start of the year, yet the latest data from Domain shows clearance rates in Sydney and Melbourne still holding firm at high levels around 65%.

Your Feelings Are Deceiving You: Over the past 12 months, national housing prices actually rose by 6.1%, hitting a new two-year high.

At the same time, the performance across capital cities shows clear divergence — Perth led the pack with a staggering 22% surge, followed closely by Brisbane and Adelaide with increases of 13% and 12% respectively. Even the "relatively softer" Sydney and Melbourne saw growth of 6% and 1.5%.

01 The Data Doesn't Lie: The Australian Housing Market Remains Strong

While many people feel the market has "cooled down," the Australian housing market has delivered a surprising report card.

As of October 2025, national house prices achieved an annual growth of 6.1%, the highest growth rate in two years. In October, national house prices rose by 1.1% month-on-month, the fastest monthly growth rate since May 2023.

This data is supported by varying degrees of growth across capital cities, forming a distinct "West Hot, East Stable" pattern. Perth became the absolute frontrunner, with prices soaring approximately 22% over the past 12 months. Brisbane and Adelaide were not far behind, maintaining strong annual gains of around 13% and 12% respectively.

The latest Domain clearance rate data further confirms the market's resilience. In mid-to-late November 2025, Sydney's clearance rate held firm at a high of 67%, both Melbourne and Adelaide reached 66%, and Canberra remained active at 61%. These figures are well above the threshold distinguishing a seller's market from a buyer's market, clearly pointing to a market that is still active.

02 Why the Disconnect Between Perception and Data?

The Market Shifts from "Frenzy" to "Rationality"

The current market is a slowdown in the pace of growth, not a fall in absolute prices. It's like a car moving from slamming on the accelerator to cruising steadily – the car is still moving forward, just at a slower speed.

The 1.1% month-on-month rise in national house prices in October 2025 was the fastest monthly increase since May 2023, but this accelerating growth momentum is easing, creating the impression of a weakening market.

The Spring Supply Wave Changes the Game

Spring is the traditional peak selling season, with a significant increase in the number of properties listed for sale. In mid-November 2025, 3,136 properties were listed for auction across capital cities, with 3,270 properties expected to go under the hammer the following week, making it the busiest week since March 2025. The increase in supply has shifted the psychological balance between buyers and sellers: buyers have more choices and negotiating power, no longer needing to blindly overbid as they did when supply was tight; while sellers face more competition and have to adjust their price expectations. This return of bargaining power is misinterpreted by many as a market cool-down.

Divergent Performance by Property Type

The market is increasingly showing signs of fragmentation. In Melbourne's Prahran, a luxury four-bedroom, two-bathroom house with a climate-controlled wine cellar sold for just $5.5 million, well below the seller's $6 million reserve price.

Meanwhile, mid to low-priced properties continue to be highly sought after. Emma Bloom, Director of buyer's agency Morrell & Koren, analyzed: "High-end buyers are more cautious, while sellers still cling to the mindset from the pandemic 'hot market,' creating a price gap."

Policy Directing Fund Flows

The expansion of the federal government's "5% Deposit Scheme" has profoundly impacted the market. From October 1st, the cap on places and income eligibility criteria for the scheme were removed, making it essentially unlimited, and the price caps for related regions were also increased.

Therefore, pre-approval applications for 5% deposit schemes have increased significantly. As a result, the processing timeline at the major banks has extended from just one or two days to two and a half weeks or even four weeks.

Data shows that properties valued within the price cap of the 5% deposit scheme rose by 1.2%, while those valued above the cap increased by 1.0%. This policy-driven flow of funds has further exacerbated market fragmentation – properties that qualify under the policy continue to rise, while those that don't remain relatively stable.

03 The West Coast's Surge vs. The East Coast's Stability

The most notable feature of the Australian housing market over the past 12 months has been the clear divergence between the east and west coast cities.

Perth's performance has been astounding, with a 22% annual price increase making it the undisputed leader. The property market in this west coast city seems to be in a parallel universe, with buyer enthusiasm showing no signs of waning.

Meanwhile, Brisbane and Adelaide followed with increases of 13% and 12% respectively, demonstrating the continued appeal of medium-sized capital cities.

Even the "relatively softer" Sydney and Melbourne saw growth of 6% and 1.5% – while modest, these figures absolutely cannot be described as a decline.

Behind this divergent landscape lie differing economic fundamentals, population inflows, and affordability across regions. Perth's strong performance is primarily driven by relative affordability, strong interstate migration, and extremely low vacancy rates.

04 Future Outlook for the Australian Housing Market

Looking ahead, the divergent trend in the Australian housing market is likely to persist.

On one hand, resource-rich cities like Perth and Brisbane are expected to maintain their growth momentum, supported by strong interstate migration and relative affordability; On the other hand, traditional major cities like Sydney and Melbourne may face more adjustment pressures.

Key factors supporting the market include: persistently low vacancy rates, tight supply, and long-term demand driven by immigration.

For different participants, this means:

For buyers, the market offers more choices and negotiating power, presenting a good opportunity to enter the market or upgrade.

For sellers, it's necessary to set more realistic price expectations and be prepared for marketing.

For investors, mid-to-low-priced properties in regional centers and capital cities may offer better return opportunities.

Walking the streets of Sydney, you might hear people talking about auction sites no longer being as packed as they were at the start of the year; buyers indeed have more choices and negotiating power. However, Domain's clearance rate data doesn't lie – a 67% clearance rate clearly tells us this is still a seller's market.

The truth about the market lies somewhere between perception and data: it is neither as "cold" as it feels, nor as "hot" as it was at the beginning of the year.