Values start strong

Australian home values rose by 0.8 per cent in January, according to Cotality’s Home Value Index, a subtle acceleration from the 0.6 per cent increase recorded in December.

The latest data shows that while every capital city and region recorded an increase in home values through the month, the start of the year returned a mixed result.

Sydney and Melbourne are weighing on the national result, with a 0.2 per cent and 0.1 per cent increase respectively in January; a marginal pickup following the slight falls recorded in December.

Both markets have values slightly down on their peak levels, with Sydney 0.1 per cent below the November 2025 peak and Melbourne values remaining 0.7 per cent lower than record highs recorded in March 2022.

The mid-sized capitals have continued their solid growth run, however some momentum has left the upswing in these cities as well. Perth values were 2 per cent higher in January, the strongest gain across the capitals, but well below the cyclical high of 2.9 per cent monthly gain recorded in November last year.

Similarly, Brisbane’s monthly gain has slowed from 2.0 per cent in October last year to 1.6 per cent in January, and Adelaide’s monthly increase dropped back to 1.2 per cent from a 1.8 per cent rise in December.

Cotality research director Tim Lawless noted the market’s resilience, but suggests further momentum is likely to leave the market.

“Despite the most unaffordable conditions on record in many cities, along with a rebound in cost of living pressures and prospect of a rate hike as early as this Tuesday, we are still seeing a broad-based rise in housing values,” Lawless said.

“The ongoing capital gains reflect persistently low inventory in the face of above average housing demand, however we are likely to see demand side pressures gradually ease in 2026.

“Affordability and serviceability constraints are likely to naturally dampen demand, but also renewed cost of living pressures and a strong chance that interest rates will rise. There is also slowing population growth to consider”, he added.

Cotality estimates the number of homes advertised for sale was 19 per cent below levels at the same time last year, and 25 per cent below the five-year average for this time of year. At the same time, the rolling quarterly number of home sales was estimated to be 2.7 per cent higher than a year ago and only 1.8 per cent below the five-year average.

Digging a little deeper, most cities are continuing to see homes at the lower end of the value spectrum supporting growth, especially for houses. Across the combined capitals, lower quartile house values were up 1.3 per cent in January compared with a 0.3 per cent rise across the upper quartile.

“This trend of stronger growth conditions at lower price points is supported by intense competition for more affordable houses”, Lawless said.

“This is where first home buyers, investors and, progressively, mainstream demand is most concentrated.”

Regional markets have delivered a stronger growth outcome, with the combined regionals index up 1.0 per cent in January compared with a 0.7 per cent rise across the combined capitals.