Housing Fever

Australia

December 2025 found housing prices rising across all Australian capitals but at markedly different speeds. Brisbane, Adelaide, Perth, and Hobart lead the upswing, while Canberra, Melbourne, and Darwin show more subdued growth.

Price-to-rent ratios, which focus on the relationship between prices and rental fundamentals, point to renewed valuation pressure in Brisbane, Adelaide, Perth, Hobart, and Darwin. Canberra and Sydney show only gradual increases, while Melbourne remains broadly flat, indicating a closer alignment between prices and rents.

The fever index paints a sharper and more differentiated picture. In addition to rents, the index incorporates interest rates and housing supply, capturing speculative intensity. Viewed through this broader lens, three distinct groups emerge:

• Elevated and rising speculative pressure: Adelaide, Brisbane, Perth, and Hobart
• Moderate pressure: Darwin and Canberra
• Low and stable pressure: Sydney and Melbourne

Comparison of these two measures highlights an important distinction. Some cities with rising price-to-rent ratios (notably Darwin) exhibit only moderate speculative pressure once financing and housing supply factors are taken into account. Conversely, Adelaide, Brisbane, Perth, and Hobart display consistent signals across both metrics, suggesting that price growth in these markets is increasingly driven by speculative dynamics rather than fundamentals alone.

Overall, the combined evidence indicates that although prices are increasing nationwide, speculative risk remains highly concentrated, with Sydney and Melbourne continuing to appear relatively balanced once macroeconomic conditions are accounted for.

New Zealand

The New Zealand housing market remains stable following the sharp correction in 2022. As in the previous quarter, both national and regional price-to-rent ratios remain broadly unchanged, indicating a continued equilibrium between housing prices and rental income.

In contrast, the fever index, which incorporates interest rates and housing supply conditions in addition to rents, continues to reveal meaningful regional divergence. Consistent with last quarter, speculative pressure is rising in Wellington while somewhat easing in Otago. In particular, over the December quarter the ongoing decline observed in Otago since 2022 appears to be moderating, whereas the upward momentum observed in Wellington has persisted.

Australia

The Australian housing market maintained upward momentum into mid-2025, though regional patterns diverged. Sydney and Darwin prices have resumed growth after a short period of consolidation, while Perth, Adelaide, and Brisbane continue to accelerate more sharply. Hobart remains below its 2022 peak, showing a gradual recovery, and Melbourne remains largely flat. Overall, national prices have risen steadily since late 2022.

Price-to-rent ratios show moderate increases in Adelaide, Brisbane, and Perth, with milder rises in Darwin and Hobart. In other capitals, ratios are largely unchanged, indicating that rents and prices have been moving broadly in tandem.

The fever index points to persistent overheating pressures in several mid-tier markets. Adelaide, Brisbane, Perth, and Hobart all exhibit clear upward trajectories in speculative intensity, surpassing their 2021-22 levels. In contrast, Sydney and Melbourne remain comparatively subdued, reflecting more balanced underlying fundamentals.

New Zealand

The New Zealand housing market has stabilized following the sharp correction of 2022. Both national and regional price-to-rent ratios have remained steady, suggesting a broad equilibrium between housing prices and rental income.

At the same time, the fever index reveals regional divergence. Wellington’s index has risen notably, signalling mounting speculative pressure, and Otago continues to trend downward. Other regions, including Auckland, Canterbury, and Waikato, show limited movement, which is consistent with a contained market environment in those regions.

The Australian housing market showed modest divergence in early 2025. Sydney, Brisbane, Adelaide, and Perth maintained clear upward momentum, while Hobart, Canberra, Melbourne and Darwin remained largely flat.

Price-to-rent ratios remained broadly flat across all capital cities, indicating that rents and prices have moved in tandem. The fever index, however, reveals evidence of some  uneven pressures across the metropolitan areas: in Adelaide, Brisbane, Perth, and Hobart the index signals a rising risk of overheating; in Sydney, Melbourne, and Canberra the index appears stable; and in Melbourne the index is edging lower. At the national level, the fever index held steady.

In the New Zealand housing market the recent general fall in prices appears to have stabilized and the market continues overall to be subdued. But the fever index reveals considerable differences in the region: in Wellington the fever index continued to climb, highlighting deteriorating fundamentals in the city; in Otago the index remains at a much lower level, divergent from the rest of NZ; the remining regions (Auckland, Waikato, Bay of Plenty, and Canterbury) have stayed relatively stable over the last quarter and the previous year.