Fresh figures have revealed that national dwelling values continue to nudge higher amid tight supply and a mounting buyer squeeze.
Cotality’s Home Value Index report, released on Monday (2 February), showed that national dwelling values rose 0.8 per cent in January 2026, surpassing December’s 0.6 per cent lift, with every capital city and regional area registering gains.
Capitals diverge, while regions charge ahead
The Cotality data showed big-ticket eastern markets, such as Sydney and Melbourne, registering mild results in January after recent wobbles.
Sydney clambered just 0.2 per cent monthly from a December dip, landing at a $1,295,537 median – 0.1 per cent under its November 2025 zenith.
Quarterly growth came in at 0.2 per cent, with the city recording a 6 per cent annual increase.
Melbourne similarly recorded a timid monthly increase of 0.1 per cent, taking median dwelling values to $830,355 – still 0.7 per cent shy of its March 2022 peak
The city registered 1 per cent quarterly, 5 per cent yearly, and 9 per cent cumulative advances.
Mid-tier capitals, meanwhile, carried more thrust, though pace slackened.
Perth rocketed 2 per cent monthly – easing from November’s blistering 2.9 per cent sprint – to a $980,302 median, stacking 5 per cent quarterly and 14 per cent annual lifts.
Brisbane moderated to 1.6 per cent from October’s 2 per cent rise, reaching $905,355 on a 5 per cent quarterly and 10 per cent yearly build.
Dwelling value growth in Adelaide trimmed back to 1.2 per cent after December’s 1.8 per cent score, hitting $744,205 with 5 per cent quarterly and 9 per cent annual gains.
Hobart vaulted 2.2 per cent to $522,309, while Darwin added 1.5 per cent, reaching a median value of $584,874 – a 9 per cent annual rise.
Combined capitals tallied 0.7 per cent monthly, 2 per cent quarterly, and 9 per cent annually to a $1,002,462 median, trailing regions’ sharper 0.9 per cent monthly, 2 per cent quarterly, and 9 per cent annual trajectory to $912,466.
Buyer challenges mount as supply remains tight
The index concluded that demand faces mounting obstacles with inflation exceeding Reserve Bank (RBA) targets in December, heightening the likelihood of a cash rate increase on Tuesday (3 February).
This could further erode buyer confidence and stretch budgets already strained by home prices outpacing incomes and mortgage rates running a full percentage point above pre-COVID-19 averages.
Net overseas migration eased back from post-pandemic highs – a development Cotality said would moderately reduce pressure on housing demand.
The index further highlighted upcoming obstacles to demand, including APRA’s new restrictions on high debt-to-income loans, effective February 1, alongside elevated investor activity and a three-point serviceability buffer.
Supply constraints, however, provide a counterbalance, with the number of homes listed for sale trailing 19 per cent behind January 2025 levels and sitting 25 per cent below the five-year January average.
This comes even as quarterly home sales edged 1 per cent higher than 2025 and only 3 per cent under long-term norms.
Cotality deduced that strong employment and steady economic growth, combined with state and federal incentives for first home buyers, would continue to channel demand toward more affordable properties.
Cotality projects market grit and gathering risks
Cotality research director Tim Lawless emphasised the housing sector’s ability to post gains under immense pressure, including unprecedented affordability hurdles and immediate threats from policy changes.
He attributed the broad-based advances to a fundamental imbalance between limited stock and sustained buyer interest, yet warned that several factors could moderate the upswing.
“Despite the most unaffordable conditions on record in many cities, along with a rebound in cost-of-living pressures and prospect of a rate hike as early as this Tuesday, we are still seeing a broad-based rise in housing values,” Lawless said.
“The ongoing capital gains reflect persistently low inventory in the face of above average housing demand; however, we are likely to see demand-side pressures gradually ease in 2026.”
He outlined specific influences likely to curb enthusiasm, including structural barriers for buyers, resurgent household expenses, elevated borrowing costs, and demographic shifts.
“Affordability and serviceability constraints are likely to naturally dampen demand, but also renewed cost-of-living pressures and a strong chance that interest rates will rise,” he explained.
“There is also slowing population growth to consider.”
Lawless also outlined the concentration of activity in cheaper segments, where multiple buyer groups converge amid broader market softening, and said the dynamic spotlighted that affordability issues would continue to reshape competition across price points.
“This dynamic highlights how affordability issues reshape competition across price points. This trend of stronger growth conditions at lower price points is supported by intense competition for more affordable houses,” he said.
“This is where first home buyers, investors and, progressively, mainstream demand is most concentrated.”
[Related: Perth hits $1m milestone in red-hot market surge: Domain]
