Home-prices surge as buyers driven by FOMO

Australia’s housing market has shaken off last year’s lethargy, posting its strongest monthly gain in more than two years as interest-rate cuts and federal incentives sparked a rush of new buyers — and a wave of fresh loan activity for mortgage brokers.

New data from Cotality shows national home values rose 1.1 per cent in October, pushing the median dwelling price to $872,538, the highest on record. The increase was broad-based, led by Perth (up 1.9 per cent), while Sydney (up 0.7 per cent) and Melbourne (up 0.9 per cent) also posted solid lifts.

Cotality’s head of research Eliza Owen told ABC News that “October actually showed a real pick-up … with the pace of gains increasing in most parts of the country,” adding that values could climb 6 to 7 per cent by year-end as rate cuts and government incentives “boost growth capacity.”

For brokers, the data confirms what many have felt in their pipelines: a renewed appetite for borrowing — particularly from first-home buyers and investors — and a clear shift in market sentiment from caution to competition.

Three rate reductions since February have widened borrower capacity, while the government’s 5 per cent deposit scheme, introduced on October 1, has brought a new wave of clients into pre-approval queues.

Cotality’s long-term data shows that spring typically produces a 9 per cent lift in property sales in New South Wales and a 7.8 per cent rise in Queensland, with listings up around 14 per cent nationally. October also saw 1,334 Sydney auctions in a single week, compared with 996 in the same week last year.

Investor lending has surged in parallel with the first-home buyer push, creating what brokers describe as a “two-speed” market.

In its October Financial Stability Review, the Reserve Bank of Australia warned that “investor activity tends to drive housing price dynamics to a greater extent than owner-occupier activity,” and that high concentrations of investor loans “could contribute to a housing price upswing that raises the risk of a subsequent correction.”

Eliza Owen told ABC News that investor lending now accounts for around 40 per cent of new mortgage originations, up from about 25 per cent five years ago. “As capital gains have increased and the difference between owner-occupier and investor mortgages has narrowed, we’ve seen a substantial pick-up in investor activity,” she said.

Agents have reported record crowds at auctions across Melbourne, as people are keen to invest as FOMO keeps increasing.

Despite the jump in buying activity, housing supply remains critically short. Rents have climbed 0.5 per cent in the past three months, and the national rental vacancy rate remains near 1.4 per cent, according to Cotality.

RBA Governor Michele Bullock has acknowledged that Australia’s housing shortage is likely to persist for at least two years, even with new supply programs underway.

For brokers, that combination — strong demand, minimal stock, and low vacancies — is keeping borrower urgency high and approval timelines tight. It also raises credit quality questions, as more buyers stretch to compete in multiple-bid auctions.

While the probability of a Melbourne Cup Day rate cut has faded after hotter-than-expected inflation data, the RBA has signalled that further easing is still on the table in 2026.

That outlook, combined with higher investor volumes, means lenders and aggregators are likely to revisit loan-to-value ratio exposure, interest-only lending, and serviceability buffers into the new year.

For mortgage professionals, the latest upturn presents opportunity — and caution. Refinance volumes have softened since midyear, but new purchase activity is back near its 2021 peak. Pre-approval requests are rising sharply, and borrower complexity is increasing as first-home buyers, investors, and upgraders converge in the same segments.

Brokers are also reporting renewed pressure on turnaround times, particularly for high-LVR loans under the new deposit scheme, where documentation and lender risk checks have become more intensive.

As interest rates stabilise and sentiment lifts, the challenge for brokers will be to balance borrower optimism with responsible lending discipline.

Which suburbs are growing in value the most?

Top Australian suburbs by average 10-year annual growth in median house price (since 2015) 

¹Approximate median house price at latest reporting.