Australian home prices rose sharply in 2025, climbing 8.6%. Across every state capital, property values increased, with Darwin leading at 18.9%, Perth 15.9%, and Brisbane 14.5%. Sydney's prices went up 5.8% but remain the highest with a median over $1.28 million. Experts predict prices will grow by at least 5% more in 2026. Demand still beats supply despite affordability issues and possible interest rate hikes. Tim Lawless, research director at Cotality, said, "A ‘higher for longer’ setting on interest rates, alongside a resurgence in cost-of-living pressures and worsening affordability pressures, looks to have taken some heat out of the market." He noted supply problems will continue, helping keep prices supported. Some banks expect a rate hike in early 2026 and no cuts. SQM Research predicts 6-10% growth, with Perth, Brisbane, Adelaide, and Darwin leading. AMP's economist Shane Oliver expects 5-7% growth. Rising costs hit younger Australians hard. Rents rose 5.2% in 2025 and average rents are up 7.4% annually over five years. Finder’s analysis shows the price-to-income ratio has jumped from 3.3 times incomes 40 years ago to over 10 times now. Average home prices went from $64,000 to nearly $1 million. Interest payments now consume more of income than in the 1980s, despite higher past interest rates. Taylor Blackburn of Finder said, "Today, Aussies face more years of saving, higher deposits and larger debt, all while pay packets haven’t really kept up." Property prices surged 46.8% nationally in five years, with Perth and Brisbane nearing 90% increases. Investors have fueled demand through tax benefits, pushing many young adults to keep renting. With prices outpacing wages, parents’ wealth plays a bigger role than young buyers’ jobs in buying homes today.