Melbourne Real Estate Prices Surge, Setting New Records as Six Capitals Reach Million-Dollar Status

Melbourne's real estate market is staging a "decisive recovery", according to property portal Domain, hitting a new record for its median house price for the first time in four years. It comes as national house prices have risen for a 12th consecutive quarter, the real estate firm's December Quarter House Report found, marking "the longest uninterrupted growth cycle since 2012-2015". Domain said Melbourne had "clearly re-entered a sustained growth phase" as part of a 7.4 per cent increase for house prices in 2025. Meanwhile, there have been warnings that Sydney's property market could become even more expensive, with a $2 million median price tag "conceivable" within two years. Six capitals now in 'million-dollar club' The Domain report found that house prices in all capital cities, apart from Canberra, are now at their highest-ever levels. Prices grew by a combined 3.9 per cent in the December quarter across the country for a spike of 9.6 per cent in 2025, totalling $111,728. Australia now has six capital cities with a median house price of more than $1 million after Perth became a member of the seven-figure club for the first time on the back of the nation's fastest growth to end 2025. Perth joined Sydney, Melbourne, Brisbane, Adelaide and Canberra with median prices above $1 million. House prices in the Victorian capital rose by an average of $31,614, or 2.9 per cent, in the December quarter to reach $1,111,084. The report also showed that Brisbane and Adelaide experienced double-digit annual increases in house prices, with Brisbane's run described as "historic". With a 4.5 per cent climb in the December quarter and an annual change of 13.3 per cent, Brisbane's median house price is now $1,171,237, compared to $1,033,999 just a year earlier. Gaining membership to the million-dollar club in 2025, Adelaide isn't far behind at $1,094,427 (compared to $978,174 in December 2024), after a 5 per cent quarterly leap for an 11.9 per cent increase over 12 months. In Darwin, house prices rocketed 22.4 per cent to a median of $690,896 — up from $564,581 in December 2024 — which included a 3.3 per cent rise in the December quarter. Sydney records modest rises The report found that houses in Australia's largest city saw the nation's slowest growth over the last three months of the year. Sydney's quarterly rise was just 2 per cent, or 6.4 per cent annually. But the Harbour City's median unit prices appeared to rebound in the December quarter. While Sydney's annual rise was only 3.2 per cent, there was a 2.1 per cent increase in the last three months of 2025, giving it new momentum for its strongest growth in units since mid-2023, Domain says. "We're seeing buyers gravitate towards units in Sydney, Melbourne and Brisbane in search of relative value, while smaller capitals like Perth and Adelaide are leading the charge on house price growth," said Domain's chief of research and economics, Nicola Powell. The nation's capital was the only major city to record a quarterly fall for home units, even though Canberra's median house price rose 3.6 per cent for a median of almost $1.4 million — their highest level in two years. Canberra's home unit prices saw a second consecutive quarterly decline, falling by 1.3 per cent to a median of $611,466. Its apartments are now 2.3 per cent down on their peak of September 2023. Even so, the combined median home unit price for Australia's capital cities grew by 3.5 per cent — up to $722,811 — in the December quarter to be 6.8 per cent higher than a year earlier ($676,801). "This momentum continues to be supported by improved borrowing capacity following the three interest rate cuts delivered in 2025, alongside tight housing supply, a resilient labour market and solid wage growth," Ms Powell said. "Buyer confidence is up and the expansion of the home guarantee scheme last October has played a role in creating the greater momentum we've seen." 'Sydney could hit $2m by 2028' Sydney continues to have Australia's most unaffordable real estate. Even with its relatively modest rises, Sydney's median house price inched closer to the $2 million mark, adding $34,177 in the December quarter to almost $1.76 million. And its median home unit price of $844,390 was more than $100,000 higher than its closest competitor of Brisbane ($770, 471). Ms Powell predicted that Sydney could breach the $2 million mark within two years, given the way the market is going. Perth catching up to Melbourne The rise of Perth, she said, was "extraordinary", particularly when compared to Melbourne since the COVID-19 pandemic. In addition to its 18.4 per cent annual rise in median house prices, Perth's home units jumped 7.4 per cent in the December quarter for a 17.8 per cent climb for the year. "Back in 2019, Perth house prices were 42 per cent cheaper than Melbourne but now that gap is only 2 per cent after an extraordinary period of catch up," Ms Powell said. "This is because of strong demand in Perth with a lot ot people moving to Western Australia — not just from overseas but we've also seen net interstate migration. "Once Perth and Adelaide were described as affordable, but with both cities joining the million-dollar club in the past 12 months, it's very hard to call them that today." Ms Powell said she expected that Brisbane real estate would continue to be sought after in the lead-up to the 2032 Olympics and Paralympics, having been the best home unit performer in 2025 and the second best in terms of house price rises. "But the pace of growth could slow down in other cities, with at least two interest-rate hikes predicted for 2026."