Australia’s housing upswing is being led not by Sydney and Melbourne, but by the mid‑sized and smaller capitals that used to be seen as the last refuges of affordability.
The latest PropTrack Home Price Index shows national home values are now 9% higher than a year ago, with prices lifting another 0.5% in February and pushing the combined capital city median dwelling value above $1 million for the first time.
Meanwhile, fresh figures from Cotality point to a clear split in early 2026, with cheaper markets racing ahead. Australia’s housing market is splitting in early 2026, with cheaper homes and mid-sized capitals powering ahead while Sydney and Melbourne lose momentum, and the competition most intense at the lower end of the price spectrum.
Darwin and Hobart, the only capitals where the median house price remains under $1 million, are now firmly in catch‑up mode. Darwin’s median home value sits just under $600,000, yet house prices there have jumped 16.4% in a year – a gain of more than $100,000 – while units are up 15.5%.
Local agent Daniel Harris of Real Estate Central said conditions have flipped quickly against locals.
“Prices can only go north in the current environment with such high demand and low supply,” Harris told realestate.com.au, noting that investor interest and limited listings have tightened the market across the board.
Hobart has also re‑accelerated after an earlier cooling. Annual price growth has climbed back into double digits, and the city recorded the fastest monthly gain of any capital in February.
Agent Katrina Arkley of Arkley & Co said confidence has returned to more affordable price points.
“The higher end has slowed, but the lower end is definitely moving along nicely with the first-home buyer incentives that are available at the moment,” Arkley said.
Perth remains the standout growth story. PropTrack data show its house prices have surged 19.5% over the year, with the typical home adding $181,000 to reach about $1.075 million. Unit values have jumped 22.5%, lifting the median unit price by $128,000 to $690,000 as more buyers shift away from freestanding houses.
Cotality’s latest read on the market reinforces that momentum. Perth clocked a 2.3% rise in values in February alone, adding more than $22,500 to the median dwelling in just one month, while Brisbane, Adelaide, and Hobart each posted gains above 1%. In contrast, Sydney and Melbourne were effectively flat over the month and slightly negative over the quarter as higher interest rates and softer sentiment bite.
PropTrack senior economist Eleanor Creagh (pictured) said the strongest conditions are in markets where demand is colliding with a shortage of listings.
“The strongest conditions remain concentrated in markets where buyer demand is facing into tight supply, particularly Perth, Darwin, Brisbane, and Adelaide,” Creagh said.
Cotality research director Tim Lawless said the pressure is most intense at the cheaper end of the market.
“There is a lot of competition for lower-priced properties,” Lawless said. “First-home buyers, investors, and subsequent buyers are all competing across this sector of the market, while credit is less available across the higher price points due to serviceability constraints.”
Brisbane’s house market has now overtaken most of the country, with typical values up about $166,000, or 14.6%, over the year to just above $1.2 million. Like Perth, Brisbane’s units are rising even faster, up 20.3% year‑on‑year.
Creagh noted that “price growth for units had outpaced that of houses” in recent months, adding: “This suggests demand may be shifting toward more affordable stock as borrowing capacity remains constrained.”
Analysts say the balance of 2026 will hinge on the path of interest rates, ongoing strong population inflows, and how quickly new housing supply can be delivered. For now, the million‑dollar median is being defined not by the biggest capitals, but by the once‑affordable cities where buyers are competing hardest for the dwindling stock that remains.
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