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Australian Home Prices Surge: Will the Reserve Bank’s Inflation Fight Face a New Test?

Australian home prices surged in October, complicating the Reserve Bank’s inflation fight.

November 2, 2025, 5:07 PM

Aerial view of a long, straight street lined with modern, identical-roofed suburban homes in Melbourne.

A row of new, modern suburban houses on a straight street in a rapidly growing Melbourne suburb. By doublelee / Shutterstock.com.

Executive Summary

Australian home prices experienced their most rapid ascent in over two years during October, with the Home Value Index recording a 1.1% increase.

Regional markets led the charge in October, with Perth seeing a 1.9% jump, Brisbane an 1.8% rise, and Darwin growing by 1.6%.

The significant surge in the property market could complicate the Reserve Bank’s ongoing efforts to manage inflation and stabilize the economy.

The Trajectory So Far

The rapid ascent of Australian home prices in October, marking their strongest monthly gain in over two years, presents a significant challenge for the Reserve Bank’s ongoing efforts to manage inflation, as a booming housing sector can fuel consumer confidence and spending, potentially exacerbating inflationary pressures and complicating monetary policy decisions.

Assessing Risk and Value

The significant 1.1% surge in Australian home prices in October complicates the Reserve Bank’s efforts to control inflation, potentially leading to sustained higher interest rates or further tightening of monetary policy. This scenario poses risks for investors through increased borrowing costs and potential dampening of future property value appreciation, while also highlighting the need to assess the sustainability of current valuations and regional market strengths, particularly in rapidly growing areas like Perth and Brisbane.

Expert Predictions and Forecasts

Property consultancy Cotality indicates a robust rebound in the Australian housing sector, with the Home Value Index recording its strongest monthly gain in over two years during October.

The rapid appreciation in the housing market is predicted to complicate the Reserve Bank’s ongoing efforts to manage inflation by potentially fueling consumer confidence and spending.

Australian home prices experienced their most rapid ascent in over two years during October, signaling a potential challenge for the Reserve Bank’s ongoing efforts to manage inflation. The significant surge across the nation’s property market could complicate monetary policy decisions aimed at stabilizing the economy.

National Home Value Index Sees Strong Growth

The Home Value Index recorded a substantial 1.1% increase in October, marking the strongest monthly gain since June 2023. This data was reported on Monday by property consultancy Cotality, highlighting a robust rebound in the housing sector.

The overall rise for the nation’s major cities also stood at 1.1%, indicating broad-based growth across key urban centers. This collective performance underscores a renewed vigor in the Australian real estate market.

Regional Markets Lead the Charge

Several regional markets outpaced the national average in October. Perth led the increases with a notable 1.9% jump, demonstrating strong local demand.

Brisbane followed closely with an 1.8% rise, while Darwin also saw significant growth at 1.6%. These figures suggest that a combination of factors, potentially including inter-state migration and local economic conditions, is fueling price appreciation in these areas.

Sydney’s Contribution to the Uptick

Bellwether market Sydney, often a key indicator for national trends, advanced by 0.7% during the month. While not leading the charge, Sydney’s positive movement contributed significantly to the overall national and major city gains.

Implications for Monetary Policy

The resurgence in the property market presents a complex scenario for the Reserve Bank. A rapidly appreciating housing sector can fuel consumer confidence and spending, potentially exacerbating inflationary pressures and making the central bank’s task of reining in inflation more difficult.