Key takeaways
Australia’s housing market is shifting into a new growth phase.
A rare convergence of falling interest rates, rising wages, increased buyer confidence, and a tight supply of quality stock is fuelling this momentum.
Auction clearance rates and volumes are showing signs of renewed urgency from both buyers and sellers.
Investors who act now are well-placed to ride the upswing before broader media sentiment and FOMO kick in.
It’s not just the data—it’s the psychological shift that’s just as important. In real estate, sentiment often precedes price rises.
The property market just got another boost—and it’s not just sentiment driving the change.
Australia’s housing markets appear to be entering a new phase of momentum, with a powerful mix of lower interest rates, higher wages, rising buyer confidence and a shortage of good properties for sale igniting activity once again.
This showed up in our auction markets over the weekend.
In this week’s Property Insiders chat, I ask Dr. Andrew Wilson his views on the latest interest rate cut and how he feels the housing markets will react.
We’ll explore:
- Why the RBA has cut rates again—even with strong economic data
- What rising wages mean for household spending and housing affordability
- The surge in auction activity and clearance rates across the capitals
- And, of course, what all this means for property investors and homeowners moving forward
Interest rates fall again – the RBA's bold move
In a move that didn’t surprise many people, the Reserve Bank cut the official cash rate by 0.25% in May, bringing it down to 3.85%, following a similar cut earlier in February.
Watch this week’s property insider chat with Dr Andrew Wilson as he explains why this move was particularly noteworthy considering the broader economy remains strong:
- Wages are rising steadily
- Retail spending is up
- The labour market remains robust
So why the cut?
The RBA believes inflation is now tracking within its target range—between 2–3%—and has therefore opted to loosen monetary policy slightly to support ongoing growth.
Their statement revealed they expect inflation to remain stable, giving them the confidence to act without risking a renewed price surge.
And while they’ve struck a cautious tone, this easing signals a shift in policy posture.
It’s no longer about fighting inflation. It’s about supporting the next phase of growth.
However, in this week’s Property Insiders chat, you’ll hear Dr. Andrew Wilson’s thoughts on whether this rate cut was really necessary.
It’s worth noting that even after the latest rate cut, the RBA still believes rates are “restrictive”, with the cash rate still above most of the RBA’s estimates of the neutral rate, which now average around 2.8%, based on the following chart from the RBA.
This, in turn, provides plenty of scope for further rate cuts to get monetary policy back to neutral.
Wages are rising – fuel for consumer confidence
The latest ABS figures show wages increased 0.9% over the March quarter, following a 0.7% rise in December.
That pushes annual wage growth to 3.4%, up from 3.2%.
Watch this week’s Property Insider chat, as Dr. Andrew Wilson explains that this is a healthy trend.
- Also read:Auction Report May 31st 2025 | Auction Markets Surge Over Final Week of Autumn
- Also read:May Home Prices Rise as Interest Rates Fall | Latest Housing Market Stats Dr. Andrew Wilson
- Also read:Rate Cuts, Rising Wages and Robust Auctions – A Turning Point for the Property Market? | Property Insiders
- Also read:This week’s Australian Property Market Update – Latest Data, State by State May 27th 2025
- Also read:Perth housing market update | May 2025
It means that more households have slightly more capacity to deal with mortgages and rising costs, and it reinforces why consumer sentiment is improving.
When people feel wealthier and more secure in their jobs, and rates are falling, they’re more likely to buy.
We know retail spending is up when people are confident in their jobs and feel their financial position is secure; they also make purchases like new homes or investment properties.
This wage growth also reflects persistent labour shortages in some industries and enterprise agreement adjustments catching up after years of wage stagnation.
Over the 12 months to March, private sector wages rose 3.3%, unchanged from the December quarter 2024. This remains the lowest annual rise for the sector since the June quarter of 2022 (+2.7%).
The public sector annual rise was 3.6%, up from 2.9% in the December quarter 2024.
Auction markets react – confidence and activity soar
Perhaps the most telling evidence of this shift in sentiment is what’s happening at auctions.
Auction volumes are rising—and so are clearance rates:
- Sydney: 754 auctions with a 74.7% clearance rate (up from 73.6%)
- Melbourne: 1184 auctions with a 72.1% clearance rate (down slightly but with much higher volumes)
- Adelaide and Canberra showed strong jumps in both activity and success rates
- Even Brisbane, despite a lower clearance rate, saw volumes jump from 124 to 179 auctions
The key trend here: More sellers are confident enough to list, and more buyers are turning up and bidding.
In Sydney, clearance rates have trended upwards since the February rate cut, with this week showing one of the strongest results in months.
And Melbourne, while slightly down from last week, continues to see robust participation.
What does this mean for property investors?
This combination - rate cuts, wage growth, and surging auction activity - suggests that we’re in a sweet spot for property momentum:
- Rates are easing at the same time as wages rise
- Inflation is under control
- Sentiment is improving
- Activity is lifting, especially in the more expensive East Coast capitals
For investors, this is clearly the early phase of a new growth cycle.
We know from experience that buyers who act before the herd often benefit the most.
While affordability constraints remain, the fundamentals are tilting in favour of those ready to make their move.
This is not just a data story—it’s a sentiment story. And in property, sentiment often leads price.
If this trajectory continues, 2025 could be a very different year from the cautious and interest rate-fuelled stagnation of 2023–24.
We’re seeing green shoots of recovery, and this time, they may take root quickly.
Whether you're an investor looking to take advantage of the upswing or a homeowner considering your next step, now’s the time to stay informed and act strategically.
