The 8.6 per cent increase in home values last year was the 11th strongest calendar year of the past four decades, according to data compiled by analytics firm Cotality.
Of the top five years of growth out of the past 40, only the 24.5 per cent boom in 2021 occurred with interest rates below current levels.
The strongest year of growth, when values soared more than 31 per cent in 1988, interest rates were around 15 per cent.
"Sometimes home values surge when you least expect it," said Cotality Research Director Tim Lawless.
"These standout years remind us that housing markets are influenced by more than just interest rates. Fiscal stimulus, credit availability, migration trends and economic shocks all play a role in shaping outcomes."
Home prices have declined in only six years in that period.
The largest dip occurred in 2008, as the Global Financial Crisis rocked the housing market, but rapid loosening in monetary policy saw values rebound by more than 10 per cent the following year.
An imbalance between supply and demand is the primary driver of price growth, with the Housing Industry Association estimating Australia's housing shortfall is close to two million.
An uptick in building approvals in November, driven by a sharp rise in apartment projects, should translate into higher levels of home building in 2026, said HIA Senior Economist Tom Devitt.
"After nearly a decade of under-building, the foundations are finally being laid for a broader housing recovery in 2026," he said.
On the demand side, inbound migration levels are also gradually returning to pre-COVID levels.
Net overseas migration fell to 306,000 in the past financial year, down from a peak of 556,000 in the year to September 2023, and is projected to fall further in coming years.
