Australia’s housing market opened 2026 on a positive note, with the latest Cotality Home Value Index showing a 0.4% rise in national dwelling values in January. While this marks the 13th consecutive month of growth, the figures reveal a continued slowdown from the peaks recorded in mid to late 2025.

January’s growth rate was the lowest since the recovery began in January 2023, and well below the monthly average of 0.6% recorded over 2025. National dwelling values rose by 8.6% over the 2025 calendar year, equating to roughly $71,400 in added equity for the median homeowner. However, as affordability constraints, higher debt servicing costs, and shifting interest rate expectations come into focus, the market is beginning to show signs of moderation.

Not all markets are cooling at the same pace. Perth continues to lead the nation, with a 1.6% increase in January and a 16.7% annual growth rate. Adelaide and Brisbane also outperformed the national average, with 1.1% and 1.0% increases respectively for the month.

These markets are benefiting from strong internal migration, tight rental markets, and limited available stock. Western Australia and South Australia remain relatively affordable compared to Sydney and Melbourne, further supporting buyer demand. In contrast, Sydney’s housing values rose by just 0.2% in January, and Melbourne remained flat. These results suggest affordability challenges and weaker economic confidence may be weighing on buyer activity in the larger, more expensive capitals

Across regional Australia, dwelling values also posted modest growth. The combined regional index rose by 0.5% in January, continuing a stable trajectory. Regional South Australia (up 1.5%) and regional Western Australia (up 1.3%) were standout performers, while regional New South Wales and Victoria recorded softer outcomes. Despite cost-of-living pressures, many regional markets remain supported by lifestyle demand and a relatively affordable entry point compared to metropolitan areas.

A factor underpinning continued price growth is low housing supply. New listings remained below the five-year average in January, even as total advertised stock levels across the combined capitals sat 17.6% below the five-year benchmark. Perth and Adelaide, in particular, continue to face severe supply constraints, contributing to upward pressure on prices.

Cotality’s data suggests that while price growth is likely to continue in early 2026, momentum is slowing and market conditions may become more segmented.

Affordability constraints, tighter lending conditions, and limited new housing supply are expected to be the dominant themes influencing housing outcomes in the months ahead.