Australia’s housing market is moving at different speeds, with Perth running hot while Melbourne lags the recovery, according to new national analysis.
Australia’s property boom is splitting in two, with Melbourne now officially the cheapest major city in the country to buy land as Perth continues to run red hot.
New analysis from the Oliver Hume Land Index shows four of the nation’s five largest land markets are now running hot, highlighting the uneven nature of Australia’s housing recovery.
The data shows Perth remains the country’s hottest property market, while Melbourne is the only major capital yet to fully recover.
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Oliver Hume chief economist Matt Bell said the national land market was performing strongly overall despite clear differences between individual cities.
“On a national basis, land markets are travelling pretty well,” Mr Bell said.
“By the end of last year most markets, four out of the five markets, were operating above that balanced level.
“Melbourne is the only one below that level but it is moving up towards it.”
Melbourne remains the only major housing market operating below normalised levels, although analysts say pent-up demand is beginning to build. Picture: Tony Gough
Mr Bell said Perth had been the standout market nationally for several years.
“Coming to the hottest market in the country, which it has been for a couple of years now” he said.
“That reflects very strong demand relative to supply.”
Mr Bell said tight supply was also shaping conditions in other parts of the country, particularly in Southeast Queensland and Adelaide.
“Southeast Queensland is a market where that tight supply is holding back volume,” he said.
“So volumes aren’t historically strong, but demand is, and that’s being reflected in price growth.”
Strong buyer demand and limited housing supply are continuing to push property prices higher across several Australian states. Picture: Jake Nowakowski
Tight housing supply is helping drive strong price growth across southeast Queensland despite land transaction volumes remaining relatively subdued. Picture: Nigel Hallett
“Adelaide is a market that has been supply constrained for a while, so we haven’t seen really big moves in volumes, but like Queensland, land prices are running really strongly.”
Mr Bell said markets that remained hot for extended periods often moved back towards more balanced conditions.
“Markets can be travelling hot and, to be honest, the longer you’re at that hot level, the closer you are to some sort of easing or return to a more balanced and moderate level,” he said.
“We’re still pretty positive on 2026. We’re not forecasting any real significant returns to means this year, but eventually markets like Perth, running hot, are going to have to soften.”
Oliver Hume chief executive Julian Coppini says Melbourne has shifted from one of Australia’s most expensive housing markets to one of the cheapest.
Oliver Hume chief executive Julian Coppini said the index also highlighted how dramatically Melbourne’s position in the national market had changed.
“Five years ago Melbourne was the most expensive, or second most expensive city in Australia,” Mr Coppini said.
“Now it’s the cheapest.”
The shift is beginning to attract renewed attention from buyers and investors looking for value.
PIPA chair Cate Bakos says Melbourne’s relative affordability is attracting renewed interest from interstate buyers and investors searching for value.
PIPA chair Cate Bakos said Melbourne’s relative affordability was already triggering stronger interest from interstate buyers.
“There’s no doubt Melbourne currently represents strong value in the national property landscape,” Ms Bakos said.
“In fact, over the past year I’ve received more interstate enquiries than I had in several years prior.”
Ms Bakos said investors were overwhelmingly targeting houses rather than apartments, particularly in the lower and middle parts of the market.
“The majority of enquiry is focused on houses in the lower and middle quartiles of the market,” she said.
REIA president Jacob Caine says Australia’s housing markets are moving at different speeds due to supply shortages, population growth and policy settings.
REIA president Jacob Caine said the diverging performance of Australia’s property markets showed the national housing recovery was unlikely to move in lock-step.
“Different markets are responding to different pressures,” Mr Caine said.
“In some states strong population growth and limited supply are pushing prices higher, while in others affordability and policy settings are influencing investor behaviour.”
Mr Caine said the national story was increasingly defined by markets moving at different speeds.
“The national story is not one market moving together,” he said.
“It’s a number of markets moving at different speeds depending on local supply, demand and economic conditions.”
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