Introduction
Australia’s housing market continued to climb in February despite an interest rate rise, with mid-size capital cities recording the strongest gains. New figures show Perth, Brisbane, and Adelaide extending their upward momentum, while Sydney and Melbourne remained broadly flat, reinforcing a two-speed market. Nationally, home values and affordability pressures remain elevated, with median prices in the capitals holding above key thresholds even as growth diverges by city and price segment.
Mid-Size Capitals Keep Rising While Sydney and Melbourne Stall
Perth recorded the largest monthly lift, with home values up 2.3% in February. Brisbane followed with a 1.6% rise, and Adelaide gained 1.3%. In contrast, the largest markets showed little movement: both Sydney and Melbourne were essentially flat despite high median house prices near $1.3 million in Sydney and about $830,000 in Melbourne. Across the capital cities as a whole, the median house price is now above $1 million.
National Home Values and Regional Outperformance
Cotality’s Home Value Index held at 0.8% nationally in February, unchanged from January, taking the national median value to $922,838. Combined capital city values rose 0.6%, while regional property prices continued to outperform, showing a stronger increase than many metro markets as buyers looked for more affordable options outside major cities.
Low Listings and Migration Drive Perth’s Momentum
Cotality’s head of research Gerard Burg said tight housing supply is a major factor behind the strong rises in the mid-sized capitals. Perth listings were reported as 48% below the five-year average, compared with 31% below in Brisbane and 23% below in Adelaide. With fewer properties available, buyers face stronger competition and reduced bargaining power, pushing prices higher.
Burg also pointed to strong migration into Western Australia alongside constrained new construction in recent years, creating a structural imbalance between population growth and housing delivery.
Cheaper Homes Perform Better in Sydney
In Sydney, where new listings were higher, value growth was more concentrated at the lower end of the market. Cheaper properties rose 0.8% over the month, supported by first-home buyer demand and participation in the federal government’s 5% Deposit Scheme. Analysts suggest higher-end segments are feeling rate pressure more acutely because credit availability tightens first for larger loans, reducing resilience in premium price brackets.
Entry-Level Housing Has Been the Big Mover
Economist Chris Richardson said the lower end of the market has led gains over the past year. He cited entry-level housing rising more than 12% nationally, equivalent to about $75,000. Richardson described the February rate rise as having a modest effect so far, but warned that an additional rate increase later in the year could shift momentum, likely slowing price growth without necessarily reversing it.
On-the-Ground Signals: Buyers Rush, Investors Reposition
Market anecdotes suggest demand remains active, with some buyers moving quickly ahead of potential future rate hikes. In Melbourne, agents described strong competition among families for limited suitable stock, alongside renewed interest from interstate investors who view Victoria as comparatively more affordable. At the same time, cost-of-living pressures are prompting some investors to sell, indicating mixed forces within the investor cohort.
Conclusion
February data reinforces a two-speed housing market, with strong gains in Perth, Brisbane, and Adelaide driven by low supply and buyer competition, while Sydney and Melbourne show weaker momentum. Regional markets continue to attract affordability-driven demand. Although the recent rate rise has not derailed national growth, analysts expect future increases to cool the pace, especially at the higher end, while entry-level housing remains the most resilient segment in the current cycle.
