Australian mortgage markets posted another solid month of price gains in November, but growth is increasingly skewed towards smaller capitals and lower‑priced properties as affordability and rate expectations start to bite.
Cotality’s national Home Value Index rose 1% in November, the third straight month of 1%‑plus gains, but down slightly from October’s 1.1% rise.
The headline result was weighed down by the two largest cities. Sydney values rose 0.5% in November and Melbourne values lifted 0.3%. Every other capital recorded at least a 1% gain, led by Perth with a 2.4% surge in values.
Cotality’s research director Tim Lawless (pictured left) said the pattern looks similar to earlier in the cycle, when mid‑sized capitals outpaced the big two.
Lawless noted that growth in home values across the mid‑sized capitals is once again diverging from the larger cities – “a similar trend to the one seen in late 2023 and 2024.”
“The skew towards the mid-sized capitals is especially evident in Perth, where listings are holding more than 40% below average, buyer demand is elevated and the 2.4% monthly rise in dwelling values has added just over $21,000 to the median in November, roughly $5,000/week,” he said.
Westpac economist Neha Sharma (pictured right), commenting on the same Cotality data, said momentum remains firm despite the slight moderation.
“The Cotality home value index, covering the eight major capital cities, rose 1%mth in November, the gain and revisions lifting annual growth to 7.1%yr. The monthly pace is a slight moderation on October's 1.1%mth, though momentum is still strong tracking at a firm 13.2% annualised pace over the last three months,” Sharma said.
“The details show that a divergence is re-emerging between the smaller and larger capital cities, similar to the previous upturn, with Sydney and Melbourne falling behind.”
Lawless said Sydney’s softer monthly gain likely reflects affordability constraints and a less severe supply deficit than other capitals.
“A lower monthly gain in Sydney, at 0.5%, could be reflective of affordability constraints putting a ceiling on growth,” he said.
Lawless pointed out that Sydney has “a smaller supply deficit, with listings tracking 2.2% below the five-year average for this time of the year,” compared with the capital‑city average where listings are about 16% below normal levels. While most markets picked up through spring, “Sydney’s monthly growth rate looks to have peaked at 0.9% in August.”
Auction data show a similar cooling at the high end.
“The subtle easing in the headline result comes as auction clearance rates have trended lower since peaking in mid-September, falling below the decade average by mid-November," Lawless said. "Both Sydney and Melbourne have seen clearance rates hold in the low 60% range through the second half of November.”
Cotality’s latest affordability metrics underline the pressure on borrowers. To the September quarter, the national dwelling value‑to‑income ratio hit a record high, with the median dwelling value 8.2 times higher than annual pre‑tax household income. The share of income required to service a mortgage on the median dwelling is near record levels at about 45%.
Lawless said inflation and the interest‑rate outlook are now an additional headwind for demand.
“Another demand-side factor that might weigh on housing growth going forward is the rebound in inflation as well as the now widely held expectation that interest rates won't be cut further anytime soon,” he said.
“With inflation once again above the RBA’s target range and rates potentially on hold for the foreseeable future, it's likely housing sentiment will suffer.
“With housing affordability already stretched and worsening, it stands to reason that fewer borrowers will be able to access credit as serviceability barriers become more prominent.”
Both Cotality (formerly CoreLogic) and Westpac highlight that cheaper segments of the market are doing more of the heavy lifting.
“We can already see the flow through effect from such stretched affordability and serviceability measures, with growth in housing values skewed towards lower price points of the market,” Lawless said.
“Over the past three months, most of the state capitals have seen values across the lower quartile of the market rising the fastest. Melbourne, where housing affordability isn’t quite as stretched, is the one exception, with the city’s broad middle of the market is seeing the fastest lift in values.”
According to Cotality’s November data across the capitals:
Sharma noted that, across the combined capitals, “dwellings further down the cost curve, in low-and-mid-tiers, are leading, rising 1.2-1.4%mth in November, meanwhile those at the upper-end – which are more cyclically sensitive – have seen slowing gains since peaking in September. These properties rose 0.6% in November.”
Despite signs of fatigue in the largest markets, Sharma said supply and demand remain out of balance across the combined capitals.
Preliminary estimates suggest “sales volumes (seasonally-adjusted) lifted in November across the major capitals (+0.9%mth) after easing since mid-year,” while “new listings rose to a lesser degree (+0.4%mth), shifting the sales-to-new-listings ratio to 1.36 compared to the long-term average of 1.16.
“Total on-market supply is running at 2.1 months of sales compared to a long-run average of 3.4 months. Both measures suggest the supply-demand balance remains tight.”
All major regional markets also posted solid gains, including regional NSW (up 0.9% m/m, 6.2% y/y), regional Victoria (up 0.8% m/m, 5.1% y/y) and regional Queensland (up 1.3% m/m, 11.4% y/y).
Looking ahead, Lawless said recent macro‑prudential moves are unlikely to have a major impact on the current upswing.
“The impacts of the recent policy announcement from APRA to limit high debt-to-income (DTI) ratio loans to 20% of new lending will also be limited,” he said. “This new credit policy won't be implemented until February next year, but even then, it's likely to only affect the margins of borrowing activity.”
For mortgage brokers, the November data confirm a market still moving higher – but with growth concentrated in more affordable segments and smaller capitals, while stretched serviceability and a flatter rate outlook are set to cap how far prices can run in 2026.
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