The Australian housing market has continued its steady recovery, marking a fifth consecutive month of growth. National dwelling values climbed by 0.6% in June, a trend fueled by recent interest rate cuts and growing consumer certainty.
The positive momentum is widespread, with nearly every broad region in Australia recording monthly gains. The first interest rate cut in February acted as a clear turning point, with a subsequent cut in May further bolstering housing sentiment and helping to push values higher.
However, it's a story of moderation. The national quarterly growth rate of 1.4% remains mild compared to the 3.3% quarterly rate seen in mid-2023. This suggests a more sustainable, "tepid" recovery rather than an explosive boom.
- Monthly National Growth (June 2025): +0.6%
- Quarterly National Growth (June Qtr 2025): +1.4%
- Key Driver: Two interest rate cuts in 2025 have been a "clear turning point" for the market.
Australian Property June 2025: Darwin Hits a New High
While the recovery is national, the performance across the capital cities varies significantly.
Darwin has emerged as the standout performer, with quarterly growth so strong it has finally surpassed its previous peak from the 2014 mining boom. Perth and Brisbane also continue to show robust growth.
Here’s a snapshot of how the major markets performed in the June 2025 quarter:
| Capital City | Monthly Change | Quarterly Change |
|---|---|---|
| Darwin | +1.5% | +4.9% |
| Perth | +0.8% | +2.1% |
| Brisbane | +0.7% | +2.0% |
| Canberra | +0.9% | +1.3% |
| Sydney | +0.6% | +1.1% |
| Adelaide | +0.5% | +1.1% |
| Melbourne | +0.5% | +1.1% |
| Hobart | -0.2% | +0.9% |
Source: Cotality, July 2025
- Also read:Perth housing market update | July 2025
- Also read:Latest property price forecasts for 2026 revealed. What’s ahead in our housing markets in the next year or two?
- Also read:Australian housing market update | July 2025
- Also read:Everything you need to know about the state of Australia’s property markets in 20 charts – July 2025
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Interestingly, the trend is beginning to shift back towards the capital cities. While regional Australia has led the charge for some time, the last two months have seen the combined capitals record a slightly higher rate of capital gain than regional markets.
The Rental Market: Growth Continues, But the Pace is Easing
For tenants, there's a glimmer of relief. The pace of rental growth is continuing to ease across the country. The national rental index rose 1.3% in the June quarter—the lowest second-quarter change since 2020.This slowdown is occurring despite vacancy rates remaining incredibly tight, hovering around the mid-1% range. The primary reason? Affordability constraints.
- Rental Affordability: The average rental household now dedicates around one-third of its pre-tax income to paying rent.
- Slowing Demand: A reduction in net overseas migration to pre-COVID levels is helping to ease rental demand.
- Slowing Growth: The national annual rental growth rate has eased to 3.4%, a significant drop from the 9.7% peak seen in late 2021.
Supply, Demand, and Market Activity
A mismatch between supply and demand defines the current market. While buyer activity is slightly below the decade average, the number of properties available for sale is scarce, creating more balanced conditions.- Low Sales Volume: Annualised housing turnover is tracking at 4.9%, just below the decade average of 5.1%.
- Scarce Supply: Nationally, advertised stock levels are 16.7% below the five-year average. This lack of available housing is a key factor supporting prices.
- Improving Seller Conditions: As a result, auction clearance rates have improved, holding in the mid-to-high 60% range, slightly above the decade average.
Looking Ahead: Property Market Outlook
A number of competing factors will shape the market for the remainder of the year. The outlook hinges on whether the positive tailwinds can continue to outweigh the significant headwinds.
- Improved Consumer Sentiment: Lower rates and easing cost-of-living pressures are expected to boost confidence.
- Tight Labour Market: A low unemployment rate continues to support household financial stability.
- Persistently Low Housing Supply: A chronic shortage of new housing approvals will continue to place upward pressure on values.
- Widespread Affordability Constraints: Housing affordability is already at record levels, limiting how much further prices can rise.
- Elevated Household Debt: High debt-to-income ratios could limit credit availability and make households sensitive to economic shocks.
- Reduced Population Growth: Slower migration will reduce a key source of housing demand.
- Geopolitical Risks: Global conflicts and trade tensions remain a wildcard that could impact consumer sentiment.
Overall, the foundations are in place for continued modest growth in housing values through 2025. However, with affordability stretched thin, we don't expect a return to the boom-time conditions seen in recent years.
