Momentum fading in outperforming property markets

The two-speed property market is levelling out as momentum in many of the fastest growing regions starts to fade.

Price growth so far across 2025 has been a lot more consistent across the country than has been the case for some time.

Unlike last year, prices are growing consistently in Sydney and Melbourne, and the smaller capitals are recording slower growth this year after very strong growth over the past five years.

Price growth is cooling in smaller capital cities like Perth following years of stellar growth. Picture: Getty

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But this is true even at smaller scale.

Analysis of ABS SA3 regions – which is a region containing 30,000-130,000 people, typically clustering a handful of related suburbs – has found the gap between the fastest- and slowest-growing areas of our capital cities is around the narrowest it’s been since 2020.

Similarly, the momentum seems to be fading from many of the fastest growing regions.

In 2025, the fastest growing regions were, on average, the regions that had grown very strongly over the preceding few years.

Much of that relationship was explained by city-level factors. Brisbane, Perth, and Adelaide consistently outperformed Melbourne and Sydney throughout much of 2020 through 2024.

But it was true even within cities: outperforming areas continued to grow faster than the city-wide average.

In contrast, how a region has performed over 2025 so far has very little relationship to how that region has performed over the past few years.

Rather, most of the country is seeing consistent, but unspectacular growth – particularly relative to the pace we’ve seen in some areas in recent years.

Whether this convergence continues remains to be seen.

Home prices are likely to continue to grow this year, on the back of further interest rate cuts and easing mortgage costs. However, the pace of growth is likely to remain modest, as it has been in much of the county this year, given affordability remains stretched.