Housing values gained momentum across almost all markets over the three months to end of May, largely due to rate cuts. Buyer confidence is increasing thanks to the cash rate reductions in February and May, coupled with optimism that more rate cuts might be on the horizon.
Australian dwelling values increased by 1.3 per cent over the quarter, with broad based gains meaning that every capital city recorded a rise of at least 0.5 per cent.
Despite the momentum demonstrated by the quarterly figures, the pace of annual gains nationally slowed to 3.3 per cent. This represents the slowest annual change since the year ending August 2023.
A rebound where values were the weakest
The rise in property values over the quarter continues to be led by the lower ends of the market, with Darwin recording the highest quarterly increase of the capitals with a 4.3 per cent rise.
However, it should be noted that some more expensive market segments are starting to accelerate in response to rate cuts.
Regional markets are also demonstrating a positive trend, recording a rise in values of 1.6 per cent over the past three months.
Tarif announcements and a lead up to the election knocked confidence
Household confidence slipped in April, with the US’s ‘Liberation Day’ tariff announcements and the lead up to the Australian federal election also causing uncertainty.
Positive factors supporting growth
The main factor boosting buyer confidence and the volume of property sales is the widespread expectation that interest rates are set to reduce further as the RBA appears to be becoming more comfortable with the path of inflation. Confidence that inflation will remain within the target range is crucial for interest rates to continue to reduce.
Some renewed confidence in household decision making after the federal election is also likely to support further price growth, with enhanced policies to support first home buyers announced.
The housing undersupply is also playing a role in supporting demand. Recent figures show commencements moving in the wrong direction, over the December 2024 quarter, holding below the decade average. Additionally, the barriers for building more homes remain substantial, with construction costs rising through the March quarter.
Downside factors
There are also factors at play that will keep housing values in check to some extent. Affordability pressures are anticipated to constrain housing demand and lower population growth should also help to quell the accrual of housing demand in the absence of an increase in supply.
It is anticipated that the factors supporting growth will outweigh these and housing values will continue to post modest rises.
Dwelling values over the quarter
Melbourne
The Victorian capital posted a 1.2 per cent quarterly move according to Cotality (previously Corelogic) figures, taking the city’s median dwelling price to $791,303. Investors should take note that the gross rental yield figure for Melbourne is 3.7 per cent.
Sydney
In the three months to May’s end, Sydney experienced a dwelling value change of 1.1 per cent resulting in a median of $1.203 million. The gross rental yield for the Harbour City remains the lowest of the capitals at 3.1 per cent.
Brisbane
The Queensland capital has again recorded the second most expensive spot for dwelling values at $917,992 and a quarterly rise of 1.6 per cent. Brisbane has recorded a gross rental yield of 3.7 per cent.
Canberra
The national capital recorded a rise of 0.5 per cent during the quarter with the median now sitting at $855,663. For Canberra, the gross rental yield is 4.1 per cent.
Perth
Perth prices increased 1.6 per cent over the quarter, taking its medium to $813,810. Perth recorded 4.3 per cent gross rental yield.
For more information about how you might be able to purchase a property in the current market, get in touch with us today.
Note: all figures in the city snapshots are sourced from: Cotality national Home Value Index (May 2025)
