Australian Housing Boom: Why Some Cities Skyrocketed While Others Stalled 🚀 (2026)

Here’s a shocking truth: while Australia’s housing market has been on a rollercoaster since the COVID-19 lockdowns began in March 2020, the story isn’t as straightforward as you might think. It’s not just interest rates driving the show. In fact, the gap between house price growth in cities like Brisbane, Perth, and Adelaide versus Sydney and Melbourne has been nothing short of dramatic. But here’s where it gets controversial: if interest rates were the main culprit, wouldn’t all markets move in lockstep? They haven’t. And this is the part most people miss: local factors—population, jobs, wages, supply, and demographics—are the real game-changers.

Take a closer look at the data from PropTrack: while home values in Brisbane, Perth, and Adelaide have nearly doubled, Sydney and Melbourne have lagged far behind. Cotality’s daily dwelling values index reinforces this trend, showing that growth in the smaller capitals continues to outpace the big two. So, what’s really going on?

Michael Matusik, in a thought-provoking article (https://substack.com/@matusikmissive), argues that interest rates are more of a sideshow than the main event. They tweak behavior at the edges but don’t dictate prices. Instead, he identifies seven key drivers of housing growth, and they’re all hyper-local:

1. Population growth—not just any growth, but a meaningful surge above long-term trends.
2. Employment growth—think stable, high-quality jobs, not short-term gigs.
3. Real wages—inflation-adjusted incomes that keep pace with rising costs.
4. Tight supply—low resale stock, scarce rentals, and limited new builds.
5. Undervalued housing—locals buying, renovating, and investing as early signs of value.
6. Demographic mix—young buyers and upgraders, not just downsizers.
7. Education—strong school catchments creating high-demand micro-markets.

Now, let’s talk numbers. Alex Joiner, chief economist at IFM Investors, shared eye-opening charts (https://x.com/IFM_Economist/status/1955864975253365085) that highlight the divergence in working-age population growth across states. By July 2025, Queensland, Western Australia, and South Australia were significantly ahead of pre-pandemic trends, while Victoria lagged and New South Wales stayed on track. This mismatch in population growth mirrors the housing price disparities—no coincidence there.

But wait, there’s more. The supply side of the equation can’t be ignored. Brisbane and Perth are grappling with a shortage of homes for sale, while Sydney and Melbourne are relatively well-supplied. This imbalance further fuels the price gap. Is it fair to blame interest rates when local dynamics are so clearly in the driver’s seat?

Here’s a bold question for you: If interest rates aren’t the primary driver, should policymakers focus more on addressing local issues like population growth, job creation, and housing supply? Or is there another factor we’re all overlooking? Let’s debate this in the comments—I’m eager to hear your take.