The End of Affordability? Sydney Hits $1.76M Record as Melbourne and Perth Join the “Million-Dollar Club”

Sydney’s Soaring Market

Sydney’s housing market has long been the nation’s most expensive, but the latest figures from Domain show the city’s median house price has reached $1.76 million, the highest on record. The surge marks the 12th consecutive quarter of growth, defying predictions of a slowdown.

Analysts attribute the rise to a combination of limited supply, strong demand from investors, and population growth fueled by migration. Despite higher interest rates, buyers continue to compete fiercely for properties, driving prices upward.

“Affordability is no longer just a challenge—it’s a crisis,” said property economist Nicola Powell. “Sydney has reached a point where the average household cannot realistically purchase a home without significant financial assistance or inheritance.”

Melbourne’s Recovery

Melbourne, which saw prices stagnate during the pandemic, has rebounded strongly. The city’s median house price climbed to $1.11 million, its highest level in four years. The recovery was driven by a 7.4 percent increase in house prices in 2025, with the December quarter showing the strongest gains.

Real estate agents report renewed confidence among buyers, particularly in inner-city suburbs. “Melbourne is back,” said agent James Ross. “We’re seeing competitive auctions again, with families and investors pushing prices higher.”

Perth Joins the Club

Perth became the latest city to cross the million-dollar threshold, with its median house price hitting $1.09 million in late 2025. The Western Australian capital saw a 9.9 percent jump in the December quarter, the steepest increase among all capitals.

The surge reflects strong demand from mining industry workers and interstate migrants seeking more affordable options compared to Sydney and Melbourne. However, the milestone has raised concerns that Perth may lose its reputation as a relatively affordable city.

Six Cities Above $1 Million

Australia now has six capital cities with median house prices above $1 million: Sydney, Melbourne, Brisbane, Adelaide, Canberra, and Perth. Adelaide crossed the threshold in April 2025, while Brisbane continues to climb as the second-most expensive city after Sydney.

Nationally, the median house price has soared to nearly $1.3 million, reflecting a 9.6 percent increase in 2025 alone.

Impact on Families

For many Australians, the dream of homeownership is slipping further out of reach. Rising prices have outpaced wage growth, leaving households struggling to save for deposits.

A recent survey found that 70 percent of renters under 35 believe they will never afford a home. Families are increasingly turning to the “Bank of Mum and Dad,” relying on parental support to enter the market.

“Without family help, it’s impossible,” said Sarah Nguyen, a 29-year-old teacher in Sydney. “Even with two incomes, we can’t compete with investors or people with large deposits.”

Government Response

The Albanese government has pledged to address affordability through increased housing supply and incentives for first-home buyers. Policies include funding for social housing projects and efforts to streamline planning approvals.

However, critics argue the measures are insufficient. “We need bold action, not incremental steps,” said Greens housing spokesperson Max Chandler-Mather. “The government must tackle speculative investment and ensure housing is treated as a right, not a commodity.”

Investor Influence

Investors continue to play a dominant role in the market, with rental demand driving purchases. Rising rents—up 10 percent nationally in 2025—have made property ownership attractive for investors seeking returns.

Economists warn that investor-driven growth exacerbates affordability issues, pushing prices higher and sidelining first-home buyers.

Global Context

Australia’s housing boom mirrors trends in other global cities, including Toronto, Vancouver, and London, where affordability has become a pressing issue. Analysts say Australia’s reliance on property as a wealth-building tool has intensified the crisis.

“Property is Australia’s favorite asset class,” said economist Shane Oliver. “Until that changes, we’ll continue to see prices rise beyond the reach of ordinary families.”

Risks Ahead

Despite the boom, risks remain. Rising interest rates could eventually dampen demand, while global economic uncertainty may impact investor confidence. Some analysts warn of a potential correction if affordability pressures reach breaking point.

Yet for now, the market shows no signs of slowing. “We’re in uncharted territory,” said Powell. “The question is not whether prices will fall, but how long households can sustain this level of debt.”

Conclusion

Sydney’s record-breaking $1.76 million median house price and the inclusion of Melbourne and Perth in the “million-dollar club” mark a turning point in Australia’s housing market. With six capitals now above $1 million, affordability has become the defining issue of the nation’s property landscape.

For families, the dream of homeownership is increasingly elusive. For policymakers, the challenge is urgent. And for investors, the boom remains an opportunity—at least for now.