Key takeaways
Australian property values reached new heights in March, reversing a recent short downward trend.
Values increased 0.4% over the month, the second consecutive month of growth in the national index, following a short three-month decline where values dipped 0.5%.
Every capital city except Hobart recorded a positive change.
Improved sentiment following the February rate cut is likely the biggest driver of the turnaround in values.
Looking ahead, cost of living relief should support household balance sheets, although the variables may change following the May 3rd federal election.
Australian property values reached new heights in March, reversing a recent downward trend, according to CoreLogic’s national Home Value Index.
Values increased 0.4% over the month, the second consecutive month of growth in the national index, following a short three-month decline where values dipped 0.5%.
| City | Month | Quarter | Annual | Total return | Median value |
|---|---|---|---|---|---|
| Sydney | 0.3% | 0.4% | 0.9% | 3.9% | $1,190,616 |
| Melbourne | 0.5% | 0.3% | -2.6% | 1.1% | $781,318 |
| Brisbane | 0.4% | 0.9% | 8.6% | 12.7% | $899,824 |
| Adelaide | 0.8% | 1.0% | 11.0% | 15.0% | $827,675 |
| Perth | 0.2% | 0.2% | 11.9% | 16.7% | $806,205 |
| Hobart | -0.4% | 0.2% | -0.2% | 4.0% | $657,059 |
| Darwin | 1.0% | 2.8% | 2.6% | 9.2% | $519,287 |
| Canberra | 0.2% | -0.1% | -0.5% | 3.6% | $854,398 |
| Combined capitals | 0.4% | 0.5% | 2.8% | 6.5% | $900,629 |
| Combined regional | 0.5% | 1.4% | 5.3% | 9.9% | $666,830 |
| National | 0.4% | 0.7% | 3.4% | 7.2% | $820,331 |
Source: Corelogic HVI 1st April 2025.
The monthly rise in values was broad-based, with every capital city except Hobart recording a positive change, along with each of the rest-of-state regions.
The monthly change across the capitals ranged from a 1.0% gain in Darwin to a -0.4% fall in Hobart.
Improved sentiment following the February rate cut is likely the biggest driver of the turnaround in values, along with the cut’s direct influence of a slight improvement in borrowing capacity and mortgage serviceability.
With the rate-cutting cycle expected to be drawn out, it will be interesting to see if this positive inflection in values can last in the face of affordability constraints.
Sydney and Melbourne, which have the largest weighting in the Home Value Index, look to have turned a positive corner, with values across both cities rising over the past two months.
Following a -2.2% decline between September ‘24 and January ‘25, Sydney home values remain just -1.4% below their record high.
In Melbourne, where the downturn has been long-running following the March 2022 peak, values remain -5.6% below their record high, despite rising 0.9% over the past two months.
Although values are still increasing across the mid-sized capitals, the pace of gains has slowed noticeably, especially in Perth, where downward revisions over recent months have put values slightly below peak levels (-0.05%) from October last year.
Perth home values have led the five-year upswing among the capitals, rising 75.4% since March 2020.
- Also read:What the Latest Data Reveals About Australia’s Housing Future | Property Insiders
- Also read:Perth housing market update | April 2025
- Also read:Adelaide housing market update | April 2025
- Also read:Rental vacancy rates tighten once more ahead of the holiday season | SQM Research
- Also read:Brisbane housing market update | April 2025
The change in values across the different ‘price points’ – or value tiers - has started to even out
Following a clear out-performance from the lower quartile of the market since mid-2023, the rate of change across the value segments is starting to converge.
This was most apparent in Sydney where upper quartile values have increased by 0.6% over the past three months compared with a 0.3% rise across the lower quartile.
Earlier research demonstrated that relatively expensive markets have historically shown stronger responses to reduced cash rate settings, especially houses in Sydney and Melbourne.
Most of the remaining capitals continue to see the lower quartile record a higher rate of change relative to the upper quartile, however, the gap is getting smaller.
Regional markets continue to outperform the capitals
The combined regionals index rising 0.5% compared with a 0.4% gain seen across the combined capitals.
However, the growth trajectory looks to be converging as the capital city trend accelerates and the regional trend holds steady.
Across the regional SA3 level sub-markets, the strongest growth conditions continue to be skewed towards areas of regional WA and Queensland.
The Mid-West of WA, which includes Geraldton, tops the list for annual growth with a gain of 25.4%, followed by Queensland’s Townsville (23.5%), Gladstone (22.2%), Central Highlands (21.8%) and Mackay (20.2%).
Outlook
With two months of growth in Australian home values now on the scorecard, it's looking more convincing that the positive turn is more than a temporary recovery… but a material upswing in values remains unlikely.
On the upside, a gradual easing in monetary policy, cost of living relief, income growth, tight labour markets and improved sentiment are all likely to support housing sector activity.
On the flip side, a variety of headwinds are likely to at least partially offset the tailwinds, keeping value growth contained.
The rate-cutting cycle is likely to be drawn out, housing remains unaffordable, population growth has reduced to more normal levels and housing credit policies remain risk averse.
- Lower interest rates, but settings are unlikely to move into stimulatory territory for some time yet: Factoring in a reasonably bullish 75 basis point cut to the cash rate for the remainder of the year (3.35% by year’s end) implies that monetary policy settings will remain above the RBA’s estimate of the neutral cash rate (of around 2.9%) throughout 2025. Until home loan serviceability improves more substantially, it’s hard to see housing markets moving into a material growth trend.
- Cost of living relief should support household balance sheets, although the variables may change following the May 3rd federal election. Alongside real growth in household disposable incomes, which the RBA forecasts at 2.5% over the 2025 calendar year, prospective borrowers may find it easier to save for a deposit with National accounts data showing a consistent pick up in the household saving ratio.
- Labour markets are holding tight, with a national unemployment rate of 4.1% and a strong trend in jobs growth. However, some speed wobbles emerged in the February labour force data, with a weak jobs growth outcome and a drop in the participation rate which is something to watch for any evidence of a weaker trend emerging.
- Measures of consumer sentiment have been rising, fuelled by improvements in inflation outcomes, cost of living relief and growing certainty that interest rates will come down further. Consumer sentiment and housing activity have historically shown a strong relationship, so the improvement in sentiment should help support sales turnover.
- Housing affordability remains stretched with the national dwelling value to household income ratio on par with record highs at 8.0 at the end of last year. Home loan serviceability was also at a record high. Assuming a household on the median income purchased the median value dwelling with a 20% deposit, they would be dedicating 50.5% of their gross income on mortgage
- Population growth is normalising, reducing overall housing demand. Population growth in the September quarter was back to 0.4%, on par with the pre-COVID decade average. The slowdown has been driven by a sharp drop in overseas migration following its peak in the first quarter of As of September 2024, quarterly net overseas migration numbers have reduced by -46%.
- Credit conditions remain cautious with mortgage originations on high debt-to-income ratios, high loan-to- income-ratios and high loan-to-valuation ratios all holding low based on the most recent December quarter update from APRA.
- New housing supply is likely to remain constrained amid high costs, a scarcity of skilled trades and compressed profit margins. Even though population growth is easing, the cumulative undersupply of housing will take some time to Housing construction costs are still rising from an already high base, creating ongoing feasibility challenges for builders and developers and the competition for trades with the infrastructure sector is likely to persist for several years at least. Low supply is another factor that could support further value growth.
