House prices pass million dollar milestone as final frontiers of affordability begin to rise – realestate.com.au

There are only two capital cities left where the average house price is still under $1 million, but as prices rise it may not be long before these cities join the million-dollar club.

House prices in Australia are now 9% higher than a year ago after values ​​rose 0.5% higher in February, according to the latest PropTrack Home Price Index.

The price rise came despite the Reserve Bank raising interest rates for the first time in two years last month after again saying inflation was too high.

Most capital cities and regional areas are now at record highs, while prices in Melbourne and Hobart remain slightly below previous price peaks.

The average value of homes in capital cities – which combines both houses and units – has now surpassed the $1 million mark for the first time, led by strong gains in the smaller capitals, which have boomed in recent years.

PropTrack senior economist Eleanor Creagh said strong demand for affordable housing and a shrinking supply of housing on the market were accentuating price growth in smaller capitals.

“The strongest conditions remain concentrated in markets where buyer demand is facing tight supply, particularly Perth, Darwin, Brisbane and Adelaide,” she said.

How house prices changed in Australia in February

Perth continues to lead the way in price growth, with values ​​increasing by as much as 19.5% in the past year.

The price of a typical home in Perth has risen by $181,000 in the past year to $1.075 million.

The average unit price in Perth increased by $128,000 to $690,000 over the same period, with values ​​growing a rapid 22.5% over the period, as increasingly unaffordable prices drive more buyers towards the more affordable property type.

Huge gains were also made in Brisbane, where the value of a typical home rose by about $166,000, or 14.6%, to just over $1.2 million in just 12 months.

Brisbane is now the second most expensive capital after Sydney and has risen in the house price rankings in recent years.

As in Perth, unit prices in Brisbane are growing faster than house prices; they are up 20.3% over the past year.

Ms Creagh said price growth for units had outpaced that of houses last quarter.

“This suggests that demand could shift towards more affordable stocks as borrowing capacity remains limited,” she said.

The last frontiers of affordability are beginning to blossom

The two smallest capital cities on either side of the country, Darwin and Hobart, still have median house prices under $1 million, but price growth in both cities has increased significantly over the past year.

Darwin has brought about a major turnaround, with the boom initially led by investors now expanding.

Affordable real estate prices and high yields initially attracted interstate investors, but that extra demand combined with a shortage of real estate on the market has caused home prices to skyrocket across the board.

Darwin is now one of the fastest growing capital cities in terms of house prices, with values ​​boosted by rising investor demand. Image: realestate.com.au/buy

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Australia’s northernmost capital is still the most affordable, with an average home value of just under $600,000.

House prices in Darwin have risen 16.4% – a gain of more than $100,000 in just 12 months – while unit prices have risen 15.5%

That growth has given recent investors an immediate boost in equity, but Darwin real estate agent Daniel Harris of Real Estate Central said increased competition has made conditions more challenging for locals trying to enter the market.

“Prices can only go north in the current environment with such high demand and low supply,” he said.

Price growth in Hobart has picked up after a post-pandemic lull, especially at the affordable end of the market, where first-home buyers compete with interstate investors. Image: property.com.au

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Meanwhile, prices in Hobart have undergone a quiet turnaround, with annual price growth now breaching the 10% mark for the first time since August 2022.

Hobart recorded the fastest price growth of any capital city in February, with the 1% value growth in February alone exceeding monthly increases in other fast-growing cities such as Perth, Adelaide and Brisbane.

Ms Creagh said this growth was due to a decline in the overall number of homes on the market.

“Hobart has accelerated again, posting its strongest monthly gain in February, with its overall share price down around 30% over the past year,” she said.

Prices in the Tasmanian capital remain just 0.2% below the previous peak of February 2022, which was driven by rapid growth during the pandemic period before prices cooled at the start of the last rate hike cycle.

The demand for affordable housing is increasing

Hobart’s relative affordability has attracted more investors from the mainland, who are competing with first-home buyers and driving price growth for more affordable housing.

Hobart agent Katrina Arkley of Arkley & Co said the recovery in prices since the market lull in mid-2025 had boosted confidence among homeowners.

Interstate investors have been attracted to Hobart’s more affordable northern suburbs. Image: realestate.com.au/sold

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“The upper segment has slowed down, but the lower segment is certainly moving well with the incentives for first home buyers that are currently available.”

“The supply has certainly increased in recent months, but so have the buyers.”

“In the northern suburbs we have had a lot of interstate buyers. Every day I am contacted by about 20 interstate buyer’s agents looking for properties under $600,000.”

Future growth depends on the interest rate increase trajectory

Ms Creagh said further growth is expected in the coming year, especially in affordable markets where housing supply is in short supply.

“The Reserve Bank’s rate hike in February will weigh on borrowing capacity at the margin,” she said.

“But tight labor market conditions, population inflows, investor activity and the expanded Home Guarantee Scheme have strengthened demand, with the limited supply of new homes providing a floor to prices.”

“These factors point to further price increases, although the period ahead is likely to see slower and more uneven growth as affordability constraints and future interest rate increases slow growth into 2026.”