Outperforming states fall back in line as capital city price growth converges

The bumper property price growth recorded in Perth, Adelaide and Brisbane over the past couple of years appears to be easing, as Sydney and Melbourne start to catch up.

Home prices around the country have been growing consistently, albeit modestly this year. In the six months since December, home prices nationally are up 3.2%.

That’s a change from the back half of last year, when home prices were growing quite slowly through spring, and even fell slightly in December. That was particularly true in Sydney and Melbourne: Sydney saw home prices fall in the last four months of 2024, and Melbourne from April through the end of the year.

That underscores the big divergence in home prices we had been seeing between the smaller capitals – Brisbane, Adelaide and Perth – and Sydney and Melbourne. Home prices in those smaller capitals surged ahead throughout 2023 and 2024, despite high mortgage rates. The same was not true for Sydney and Melbourne.

But that’s changed: we haven’t seen a big divergence in home price growth this year across the cities.

Over the first half of 2025, home price growth has ranged from 2.4% in Melbourne to 4.2% in Adelaide – a small difference, and much smaller than was true for the first or second half of 2024.

Relative affordability is probably part of this convergence. Brisbane, Adelaide and Perth had been relatively affordable markets coming in to the pandemic; but with prices having grown circa 90% in those cities since early 2020, that is no longer the case.

Further interest rate cuts are expected later this year; that will continue to ease mortgage costs, and continue to support price growth. However, the pace growth is likely to remain modest, given affordability will remain stretched.

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