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Australia's Housing Market Shifts: Prices Climb in November Amid Record Unaffordability

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  Published in House and Home on Sunday, November 30th 2025 at 20:16 GMT by KELO

Australia’s Housing Market Shifts: Prices Climb in November Amid Record Unaffordability – A Comprehensive Overview

In a month that has seen renewed momentum for the Australian residential property market, the CoreLogic House Price Index (HPI) reported a significant rise in house prices across the nation in November 2025. Yet, this uptick comes against a backdrop of record‑level unaffordability, a paradox that has drawn attention from investors, policymakers, and homeowners alike. This article distills the key take‑aways from the CoreLogic report and the broader context that frames the Australian housing story.

1. The CoreLogic Snapshot – What the Numbers Say

• National HPI Increase: CoreLogic’s HPI rose 5.3 % on a year‑on‑year basis, marking the highest single‑month increase since 2016. The index, which tracks median house price movements across major cities and regional markets, shows a sustained upward trajectory throughout 2025.

• Regional Breakdown:
  - Sydney posted a 7.1 % jump, its most robust growth in the last decade.
  - Melbourne climbed 6.2 %, driven by a surge in the inner‑city suburbia segment.
  - Brisbane recorded 4.9 % growth, reflecting a steady demand for suburban family homes.
  - Perth and Adelaide posted 3.6 % and 2.9 % increases respectively, slower than the major metros but still above the median national rise.

• Median Price Milestone: The median residential property price topped $1.1 million nationwide for the first time in two years, a figure that underscores the continuing appreciation in real estate values.

2. Unaffordability – The CoreLogic Affordability Index

While headline price figures paint an optimistic picture for sellers, CoreLogic’s Affordability Index indicates that the cost‑to‑income ratio has reached a new high. For every $1 of median weekly household income, a median house now costs $6.2, an increase of 0.5 points from October and an unprecedented level for a mature market like Australia.

Key drivers include:

• Rapid Price Growth vs. Wage Stagnation: Median household wages grew only 2.4 % in 2025, lagging behind the 5.3 % price rise.

• Interest Rate Landscape: The Reserve Bank of Australia (RBA) has maintained the cash rate at 4.75 %, its highest level since 2019. While higher rates tend to temper demand, the persistent supply constraints have kept buyer pressure high.

• Supply Constraints: Across major cities, housing supply remains below the 70‑year average, with the construction of new dwellings slowed by zoning restrictions, rising land costs, and a skills shortage in the trades sector.

These dynamics culminate in a market where buyers—particularly first‑time purchasers—find it increasingly difficult to secure mortgage financing without taking on a debt burden that outstrips their disposable income.

3. The Role of Interest Rates and Monetary Policy

The RBA’s policy stance plays a pivotal role in shaping both price movements and affordability. With the central bank’s recent decision to keep rates unchanged for a sixth consecutive meeting, the market’s anticipation of a future rate hike remains muted. CoreLogic’s commentary notes that even a modest 25‑basis‑point increase could trigger a temporary cooling effect, but the underlying supply bottleneck would still keep prices buoyant in the medium term.

Experts from the Australian Institute of Money and Banking suggest that the RBA may adopt a “steady‑state” approach, where rates rise gradually to temper the housing bubble without triggering a sharp decline in economic activity. In the meantime, mortgage lenders have introduced stricter lending criteria, especially for borrowers with higher debt‑to‑income ratios, which is further tightening the market for first‑time buyers.

4. Government Initiatives and Policy Responses

In response to mounting affordability concerns, the Australian government has rolled out a series of measures aimed at increasing housing supply and easing buyer entry:

• First Home Grant (FHGr) Expansion: The federal budget announced a $10,000 extension to the FHGr for new buyers in 2026, a measure designed to bridge the upfront cost gap for first‑time purchasers.

• Urban Renewal Incentives: Local councils across Victoria and New South Wales have introduced tax incentives for developers who commit to affordable housing units as part of larger mixed‑use projects.

• Stricter Planning Controls: The National Housing Supply Plan, announced in December 2025, seeks to expedite rezoning processes and streamline building approvals, thereby reducing construction lead times.

Despite these interventions, CoreLogic’s analysis suggests that supply increases will likely lag price growth, meaning the affordability gap may persist in the near term.

5. Investor Sentiment and Market Outlook

Domestic Investors: CoreLogic’s “Investor Confidence Index” has risen by 3.5 % over the past six months, reflecting a renewed appetite for capital gains in an environment where rental yields remain attractive. However, the report warns that rising mortgage costs could temper the long‑term profitability of residential investments.

Foreign Buyers: While the Australian market continues to attract foreign investment—particularly from China and the United Arab Emirates—new restrictions on overseas buyer interest rates are in place, capping potential growth in this segment.

Forecasts: CoreLogic’s economic forecasters predict a modest slowdown in price growth to 4–5 % for the first quarter of 2026, assuming no drastic policy changes. However, they caution that should interest rates remain low or dip, a brief surge could still occur.

6. Bottom Line – Navigating the Tightrope Between Growth and Affordability

Australia’s housing market is experiencing a delicate balancing act. While the CoreLogic HPI showcases a bullish trend, especially in the major metros, affordability metrics paint a starkly different picture. For homeowners, the rising prices may mean an increase in equity value. For potential buyers—especially younger, first‑time purchasers—access to affordable housing remains a daunting challenge.

Policymakers are under pressure to address the supply-side constraints that are at the heart of the affordability crisis. The government’s incremental measures are a start, but the real test will be how quickly and effectively they translate into increased housing stock.

In sum, the November 2025 CoreLogic report underscores a market that is simultaneously thriving and tightening. Stakeholders—buyers, investors, developers, and policymakers—must navigate this complex landscape with strategic foresight, ensuring that Australia’s housing market remains both resilient and accessible for future generations.