January Home Values: Growth Slows as Capital Cities Ease

Home Values in December of 2025 continued to rise nationally, albeit at a slower rate than the rest of the year.

Home prices are still on the rise nationally, but the large cities like Melbourne and Sydney are reporting the first decreases in median value in some time, as both dropped by a marginal 0.1%.

December’s values likely set the standard of what to expect in 2026; slow, sometimes uneven growth nationally, as uncertainty and unaffordability impact the market.

What is the Home Value Index (HVI)?

The Home Value Index (HVI)^[1], also known as the Hedonic Home Value Index, leverages recent property sales from each state to track the median value growth of homes nationwide. It serves as a key metric for analysing the performance of the Australian residential property market and is useful when looking at the affordability and investment potential of states and capital cities.

Source: Cotality HVI Report January 2026

State Market Report

These median values are as at 31st of December 2025

Sydney

The median home value has decreased 0.1% , and is now $1,280,613 .

Melbourne

The median home value has decreased 0.1% , and is now $827,117.

Brisbane

The median home value has increased 1.6% and is now $1036,323.

Adelaide

The median home value has increased 1.9% , and is now $902,249.

Perth

The median home value has increased 1.9% , and is now $940,635.

Hobart

The median home value has increased 0.9% , and is now $720,341.

Darwin

The median home value has increased 1.6% and is now $586,912.

Canberra

The median home value has increased 0.2% and is now $893,907.

Melbourne and Sydney Home Values Ease

Sydney and Melbourne have recorded their first property price declines since this time last year. With the cash rate cut cycle seemingly coming to an end and the potential for interest rate hikes back on the table^[2], property growth nationwide is expected to slow significantly as home buyers wait for more favourable conditions.

Home values will likely keep rising, just not at the rate we saw in 2025. We may not see home values rise in every capital city each month as we did for most of last year.

Cotality CEO Tim Lawless states that, while we can’t expect Melbourne and Sydney to ease significantly, this isn’t just a blip. Melbourne and Sydney were the first of the capital cities to see an easing of growth in recent months, and their drop underwater in terms of home value growth is indicative of affordability constraints.^[3]

2026 Outlook

Property prices are still rising nationally, for now. Some cities seem undeterred by the factors slowing growth nationally.

Adelaide and Perth home values reported 1.9% increases in value, while Darwin and Brisbane saw steady 1.6% increases. It remains to be seen if they’ll be unaffected by the factors slowing large cities, or if they’ll slow in the coming months.

What This Means for Buyers

It’s worth noting that the decline in home values in Melbourne and Sydney in December was marginal, only 0.1%, but it is an indicator that property prices may no longer be surging to difficult-to-reach levels.

At least one cash rate hike is expected in 2026, which has been a factor in the slowdown, so there is a push-pull effect when it comes to borrowing power.

When interest rates go up, market activity tends to slow, so property prices may come down. Conversely, when interest rates come down, market activity heats up, as we saw last year.

With property prices in two attractive capital cities decreasing, there may be more opportunities to get into the property market.

It’s unlikely home buyers will see interest rates and property prices come down at the same time, so it’s worth checking if the benefits of one outweigh the effects of the other.

What This Means for Vendors

If you’re investing or looking to sell, there’s no need to panic. Yes, property growth is slowing, and in some areas declining, but as a rule, Home values trend upwards over long periods, even if they fluctuate monthly.

In 2025, national home values increased a total of 8.5%. Even if 2026 doesn’t yield the same growth as last year, home values will likely move further upwards.

Want more information on what this means for your finance goals? Reach out to your local MoneyQuest broker for a zero-cost, zero-obligation chat to plan your next steps, so you can borrow, invest and refinance with confidence.

[1] Cotality. HVI Jan 2026. 2^nd of January 2026. Viewed 6th of January 2026.

[2] Commins, P. Australia is facing its shortest rate cut cycle in 30 years as the RBA hints it may have to start hiking. The Guardian. 9^th of December 2025,  Viewed 6^th of January 2026.

[3] Taylor, D. Sydney and Melbourne property markets go backwards as national values hit speed bump. ABC News. 2^nd of January 2026. Viewed 6^th of January 2026.

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