The new high in December followed monthly growth of 0.1 per cent, and growth of 8.8 per cent over the year, the PropTrack report released on Monday found.
Home prices in Sydney and Melbourne fell in December, each dipping by 0.3 per cent, but despite this prices were still higher than a year ago.
The median home value in Sydney hit $1.24 million, after annual growth of 6.4 per cent, while Melbourne recorded $854,000 after a yearly gain of 4.5 per cent.
In Brisbane, the median tipped over the million-dollar mark to $1.01 million as the booming Queensland capital recorded annual growth of 14.6 per cent.
Adelaide was the best performing capital city in December with home prices up 0.8 per cent to a median $908,000 in December, after a 12.8 per cent rise over the year.
Perth also did very well, with 0.5 per cent growth in the month - in line with Brisbane - to a median value of $950,000 after annual growth of 17.2 per cent.
Regional areas outperformed the capitals throughout 2025 recording higher price growth over both the month climbing 0.4 per cent over the same month as well as the whole year, the report found.
"Home prices are predicted to head to new highs in 2026, however, the pace of growth is expected to slow," REA Group senior economist and report author Anne Flaherty said.
"Price growth in 2025 was supported by three rate cuts."
With no further interest rate cuts expected in 2026, there is a possibility rates could rise if domestic inflation persists.
But limited housing supply and persistent demand could counteract any rate hikes by the Reserve Bank of Australia.
"The Australian government's five per cent deposit scheme is also likely to support price growth by driving up demand, particularly at the more affordable end of the market," Ms Flaherty said.
As well, increasing building costs and a tight labour market for construction trades will continue to keep housing supply far below what the country requires and could therefore drive house prices up.
Data published by PropTrack rival Cotality on Friday found Australian home values had surged by 8.6 per cent in 2025, adding about $71,400 to the national median dwelling value.
It was the strongest calendar year gain in home values since 2021, when the market rose 24.5 per cent amid emergency low interest rates and record-high purchasing activity during the pandemic.
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