Key takeaways
CoreLogic’s national Home Value Index posted a 0.3% rise in February, breaking the short and shallow downturn that lasted just three months
The largest month-on-month change across the capitals was recorded in Melbourne and Hobart (both up +0.4%) where home values have previously been among the weakest. For Melbourne, the lift breaks a streak of ten consecutive months of falling home values.
Conversely, the mid-sized capitals of Brisbane, Perth and Adelaide have lost their mantle as the strongest growth markets.
Improved market conditions may also be supported by a slowdown in the flow of freshly advertised ‘for sale’ listings.
It's a buyer’s market, but not everywhere. Based on listing counts to February 23, inventory levels remain elevated in Sydney (+6.9%), Melbourne (+3.9%), Hobart (+25.2%) and ACT (+6.8%) relative to the previous five-year averages.
CoreLogic’s national Home Value Index posted a 0.3% rise in February, breaking the short and shallow downturn that lasted just three months and dragging the national measure of home values - 0.4% lower.
The February rise was subtle, but broad based, with every capital and ‘rest-of-state region except Darwin (-0.1%) and Regional Victoria (flat) recording a monthly rise in values.
| City | Month | Quarter | Annual | Total return | Median value |
|---|---|---|---|---|---|
| Sydney | 0.3% | -0.9% | 1.1% | 4.1% | $1,186,459 |
| Melbourne | 0.4% | -1.1% | -3.2% | 0.5% | $772,561 |
| Brisbane | 0.2% | 0.9% | 9.7% | 13.9% | $894,425 |
| Adelaide | 0.3% | 1.2% | 11.9% | 16.1% | $822,201 |
| Perth | 0.3% | 0.3% | 14.3% | 19.4% | $807,933 |
| Hobart | 0.4% | -0.1% | -0.3% | 4.0% | $661,544 |
| Darwin | -0.1% | 0.7% | 1.5% | 8.1% | $506,591 |
| Canberra | 0.2% | -0.8% | -0.9% | 3.2% | $846,955 |
| Combined capitals | 0.3% | -0.4% | 3.2% | 6.9% | $896,613 |
| Combined regional | 0.4% | 1.0% | 5.5% | 10.1% | $661,966 |
| National | 0.3% | -0.1% | 3.8% | 7.6% | $815,912 |
Source: Corelogic HVI 3rd March 2025.
The month also marked the start of what could be an inflection in growth trends:
- Melbourne and Hobart led monthly The largest month- on-month change across the capitals was recorded in Melbourne and Hobart (both up +0.4%) where home values have previously been among the weakest. For Melbourne, the lift breaks a streak of ten consecutive months of falling home values.
- Conversely, the mid-sized capitals of Brisbane, Perth and Adelaide have lost their mantle as the strongest growth markets. With a monthly change of 2% to 0.3%, the mid-sized capitals were outpaced by Melbourne and Hobart. Adelaide and Brisbane are still leading rolling quarterly growth trends, up 1.2% and 0.9% respectively, but Perth’s value growth has slowed more sharply with downward revisions over recent months dragging the quarterly change to just 0.3%.
- The return to growth across Sydney and Melbourne is being driven by the more expensive end of the market, with upper quartile house values leading the monthly gains in both cities after high-value markets recorded the sharpest This stronger performance is in line with earlier research from CoreLogic, which highlighted that premium housing markets in Sydney and Melbourne have historically been the most sensitive to rate cuts.
The improved housing conditions have more to do with improved sentiment than any immediate improvement in borrowing capacity.
Expectations of lower interest rates, which solidified in February, look to be flowing through to improved buyer sentiment.
Along with the modest rise in values, we have also seen an improvement in auction clearance rates, which have risen back to around long-run average levels across the major auction markets.
Regional housing conditions continued to show a stronger growth trend
Relative to the capital city counterparts in February, values across the combined regionals index rose 0.4% over the month and 1.0% over the rolling quarter - compared to the 0.3% monthly rise and -0.4% quarterly fall seen in capital city values.
However, there has been some diversity in these trends, with the monthly change favouring Sydney, Melbourne and Hobart over their regional counterparts.
Improved market conditions may also be supported by a slowdown in the flow of freshly advertised ‘for sale’ listings
Counts of new listings coming to market across the combined capitals were tracking -4.7% lower than a year ago over the four weeks to February 23, and -1.5% below the previous five-year average.
Although total advertised supply levels are almost 1% higher than a year ago, listings remain -7.9% below the previous five-year average and the reduced flow of fresh stock to market could be supporting some upward pressure on prices, especially if buyers are becoming more active amid higher sentiment and lower rates.
Although housing markets look to have moved past the recent downturn, the trends from city to city and region to region remain diverse
The rate-cutting cycle is very fresh and is likely to be drawn out.
Lower mortgage rates are clearly a net positive for housing markets, supporting a rise in borrowing capacity and serviceability assessments, but interest rate settings are likely to remain in restrictive territory for some time yet.
Financial markets are expecting the cash rate to be around 3.55% by the end of the year, implying that only two more twenty-five basis point cuts are priced in.
Most economists suggest there could be up to three more cuts of a quarter per cent each this year.
Even under this more bullish assessment, a seventy-five basis point cut would take the cash rate to 3.35%, well above the pre-pandemic decade average of 2.55% and higher than the RBA’s estimated ‘neutral cash rate’ which was revised lower in the latest Statement on Monetary Policy.
- Also read:Everything you need to know about the state of Australia’s property markets in 20 charts – March 2025
- Also read:National Vacancy Rates rise to 1.3% in February | SQM Research
- Also read:Post-Holiday Rental Markets Tighten | Property Insiders
- Also read:Auction Report Mar 8th 2025 | Clearance Rates Steady Again as Auction Numbers Fall into March
- Also read:Latest Property Asking Prices State by State | Increase in National Property Listings
Until home loan serviceability improves more substantially, it’s hard to see housing markets moving into a material growth trend.
Markets where housing values have experienced a more significant downturn could be primed for a stronger value growth performance
This is given their renewed affordability advantage.
Hobart (-11.9%), ACT (-7.1%) and Melbourne (-6.4%) have recorded the most substantial declines from their recent peaks.
Source: Corelogic HVI 3rd March 2025.
More specifically, it is the premium end of these markets that have taken the biggest hit, with the upper quartile of Hobart’s market down -16.4 % from peak levels, while ACT’s upper quartile is down -9.8% and Melbourne's most expensive quarter has dropped - 8.9% in value.
Previous research from CoreLogic noted it has been the premium markets of Sydney and Melbourne that have responded the earliest and most positively to rate-cutting cycles.
Obviously, demand and supply side factors need to be considered also, which could place Melbourne in a strong position if interstate migration continues to improve.
A further lift in consumer sentiment would support purchasing activity
Historically, there has been a close relationship between measures of consumer sentiment and the volume of home sales.
We have already seen a substantial rise in sentiment readings over the past 6 months or so, although the past few months have seen the trend flatten.
If sentiment returns to more optimistic levels, along with the subtle improvement in serviceability provided by rate cuts, it's likely we will see buyer activity lifting.
A rise in demand for housing from lower interest rates and a sentiment boost will be partially offset by slower population growth
After peaking in the first quarter of 2023, the Centre for Population expects net overseas migration to reduce further as overseas arrivals continue to moderate alongside a pickup in departures as visas from the temporary surge in migrants expire.
Less migration is likely to flow through to a further easing in rental demand, and, over the medium term, reduced demand for home purchasing.
A buyer’s market, but not everywhere
Based on listing counts to February 23, inventory levels remain elevated in Sydney (+6.9%), Melbourne (+3.9%), Hobart (+25.2%) and ACT (+6.8%) relative to the previous five-year averages.
These are also the regions where prices remain below their recent cyclical highs and where buyers might be able to find a bargain, at least relative to peak levels.
Buyers looking to Perth (-28.0%), Adelaide (-33.9%) or Brisbane (- 21.5%) are still facing a dearth of homes available for sale.
Low levels of newly built housing should also deliver some support to housing values in 2025
Residential construction activity has seen a subtle rise across the detached housing sector, but multi-unit dwelling commencements remain well below average, with little evidence of a pickup in activity due to feasibility challenges amid high construction costs and tight labour markets.
