Property prices grew modestly in January across Australia, although increased choice for buyers ahead of a looming rate hike created softer conditions in the larger capitals.
Australia’s median home value rose 0.2% last month, according to the PropTrack Home Price Index, marking a steady start to the year ahead of the Reserve Bank’s first interest rate decision of 2026.
The modest uplift in the value of a typical Australian home in January came ahead of the RBA’s highly-anticipated February meeting, at which the board is widely expected to raise interest rates for the first time in more than two years.
The increased chance of a rate hike comes after recent data from the Australian Bureau of Statistics showed inflation is rising faster than expected.
A lift in interest rates would mark the end of the rate cutting cycle, with the cash rate cut three times since February last year.
Falling interest rates helped lift home prices throughout 2025, with the national median home value rising 8.4% in the past 12 months.
Could a rate rise derail price growth?
REA Group senior economist Angus Moore said despite the potential for a rate rise, several broad factors still underpinned property prices.
“Price growth in 2025 was supported by three rate cuts, but a rate rise at the Reserve Bank’s February meeting is now looking likely, with inflation coming in stronger than expected in the second half of 2025,” he said.
“While the possibility of further hikes may weigh on the market, unemployment remains very low, which will support demand.”
“At the same time, new housing supply remains limited, supporting home prices.”
How property prices changed around Australia in January
Price movements varied across the capitals in January, with Adelaide leading the pack with a 0.9% uplift and moderate rises in Brisbane (up 0.4%) and Perth (up 0.3%).
These cities have consistently recorded the strongest price growth across the capitals in recent years, with demand for affordable homes outstripping the supply of properties on the market, pushing values higher.
Perth values are 17.5% higher than a year ago, while Brisbane prices lifted 14.4% and Adelaide prices rose 13.8%.
Property prices in Darwin rose more than 14% in the past 12 months. Picture: realestate.com.au/buy
Darwin now sits among the top-performing capitals in terms of price growth, with its median home value now 14.7% higher than a year ago, despite prices remaining flat in January.
A surge in investor demand for affordable homes drove a turnaround in Darwin’s market, with prices now sitting at record highs.
Price pause and wider choice gives buyers breathing room
It was a different story in Melbourne, Sydney and Canberra, where price growth has been slower than the other capitals.
Values fell by 0.1% in both Melbourne and Canberra, while Sydney prices increased by 0.1%.
Mr Moore said home price growth had eased recently in Australia’s largest property markets amid an increase in the number of properties coming to market.
“Sydney and Melbourne have seen home price growth soften in recent months,” he said.
“Melbourne has posted three months of modest declines, and while Sydney prices were up in January, they are below their recent peak.”
An uplift in the number of new homes being listed has given buyers in Sydney, Melbourne and Canberra more choice and tempered price growth. Picture: Getty
There were more properties on the market for buyers to choose from in January, which eased pressure on prices, Mr Moore said.
“Ample choice for buyers in these cities throughout spring has likely contributed to the softer price growth,” he said.
“In contrast, Brisbane, Perth and Adelaide have continued to see strong growth, outperforming the larger capitals amid very limited choice for buyers,” Mr Moore said.
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The latest REA Group Listings Report shows there was a 10.2% year-on-year increase in new listings in Melbourne, and an 11.9% increase in Sydney. New listings in Canberra were almost 20% higher.
While the total number of homes on the market was lower across the capitals compared to a year ago, the reduction in homes for sale was particularly acute in Darwin, with 38.2% fewer properties for sale than 12 months prior.
Mr Moore said lighter sales volumes in January made it harder to assess momentum in house prices, but gains were still expected in the year ahead.
“Home prices are still likely to head to new highs in 2026, but at a slower pace of growth than in 2025,” he said.
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