By Michael Yardney April 4, 2025

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Australian Property Market Update in 6 charts

Weekly Latest
Australian Property Market Update in 6 charts

Key takeaways

Australian property prices rose 0.4% in March, following a modest 0.3% increase in February, confirming a reversal after several months of minor declines.

This subtle but consistent turnaround suggests the housing market may have found its cyclical bottom and is slowly beginning to strengthen again.

Melbourne’s property market, previously a clear laggard due to lockdowns and interstate migration losses, recorded a 0.5% rise in dwelling values in March.

Advertised rents continue to grow consistently at about 0.2–0.3% per month, despite being below the peak rates of 2023.

Tight rental conditions continue to provide strong support for property yields and place ongoing upward pressure on inflation.

With clear signals of an emerging recovery phase, the current market presents opportunities for investors to position strategically before a stronger upswing develops.

Australia’s housing market continues to defy the doomsayers.

According to the latest data, dwelling prices rose another 0.4% in March, building on the modest 0.3% gain in February.

While these aren’t eye-watering figures, they mark a consistent turnaround after several months of softening values, with minor monthly falls recorded late last year and in January.

What we’re likely witnessing now is a subtle but important shift in market sentiment—one driven largely by renewed confidence in where interest rates are headed.

Let’s unpack what’s really going on…

The RBA’s pivot is lifting sentiment

The turning point arguably came with the RBA’s rate cut on February 18—the first in the current cycle.

It was widely anticipated, and the market has already priced in a roughly 80% chance of another rate cut in May.

Even though mortgage rates haven’t moved much yet, the psychological impact of a potential easing cycle is already having a tangible effect on buyer confidence.

This kind of sentiment shift always precedes physical price movement. Buyers who had been sitting on the sidelines, waiting for the peak in rates, are now getting back into the market.

It’s classic FOMO behaviour beginning to re-emerge.

Melbourne’s recovery is particularly noteworthy

One of the more significant developments is the sustained rebound in Melbourne dwelling values, which rose 0.5% in March, extending the surprise uptick seen in February.

Melbourne has been the clear underperformer since the onset of COVID.

It lagged the other capitals not only due to prolonged lockdowns but also because of sustained net interstate migration losses, which only recently began to reverse.

But with Melbourne's relative affordability now striking—the city’s median dwelling value sits at $781,000, well below Sydney ($1.19 million), Brisbane ($899,800), Adelaide ($827,700), Perth ($806,000) and Canberra ($854,000)—it’s no surprise the market is starting to attract more interest again.

And here's the real kicker: for the first time in years, Victoria is now gaining people through interstate migration.

Over the year to Q3 2024, net interstate migration into Victoria was positive by 800 people, a clear sign that the tide has turned.

Momentum building across the capitals

Here’s a snapshot of monthly dwelling price changes across the capitals:

While some cities are clearly accelerating faster than others—Adelaide and Darwin being the standouts—it’s important to note that price growth is broad-based.

This kind of synchronised uplift tends to signal the early phase of a national uptrend.

A political wildcard: the upcoming Election

Of course, politics may temporarily disrupt this momentum.

The federal election is scheduled for May 3, and elections often bring a pause in buyer activity due to uncertainty.

That said, there’s also a policy wildcard in play.

The Opposition is now proposing a cut to the home loan serviceability buffer from 3.0% to 2.5%.

If implemented, this would improve borrowing capacity, essentially allowing more buyers to access finance and potentially pushing prices higher.

What about construction and inflation?

We’ve also seen a cooling in construction demand, reflected in the CPI component for new dwellings.

The Q4 Producer Price Index noted that builders were offering new and increased bonuses to lure buyers amid elevated costs and cautious consumer sentiment.

But if dwelling prices continue to stabilise, or even rise on the back of rate cuts, that may support the new dwelling market and reduce the disinflationary pressures we’ve seen in recent months.

One thing is clear: the sharp rise in construction costs has now abated, and it’s no longer materials driving cost growth, but labour shortages.

This shift is significant for policymakers and investors alike.

Rental growth still ticking over

Finally, we can't overlook rents.

While capital growth may grab headlines, rental markets remain tight, and CoreLogic’s data suggests advertised rents are still growing at around 0.2–0.3% per month.

This level of growth, although more modest than 2023’s extremes, is still strong in historical context and continues to put upward pressure on the CPI.

So where are we headed?

It’s still early days, but the signs of a cyclical bottom forming in the property market are becoming clearer.

With interest rate cuts likely to continue, population growth rebounding and affordability constraints gradually adjusting market preferences, we could be entering a new phase of the property cycle.

For investors, this could be the time to start positioning ahead of the curve.

As always, though, it’s not just about “the market”—it’s about owning the right assets in the right locations. Strategic property selection remains key.

About Michael Yardney Michael is the founder of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.