Australia’s housing market has recovered fast in recent months, with median house prices in the country’s main cities rising by 0.6% in May, marking the third consecutive month of growth and raising the annualised growth rate to 4.5%. This improvement is the result of enhanced affordability and higher buyer sentiment following two RBA interest rate decreases between February and May, which significantly encouraged market activity. The national housing market provides an overview.
Overview of the National Housing Market
According to My Housing Market’s most recent data, the median price for national capital city residences increased to $1,184,459 in the May quarter, up from the previous quarter. This gain validates the Reserve Bank of Australia’s economic metrics while also reflecting the country’s overall economic confidence and solid employment data.
Specific City Developments
Melbourne, in particular, has demonstrated wonderful resilience, with property prices currently flat year over year, suggesting a complete rebound from the fall.
The regional home market is entering a new growth phase as a result of a comeback in buyer enthusiasm following a weak 2023-24, good employment data, and reduced interest rates. Melbourne’s median house price is now $1,071,195, up 0.9% in May.
Another large metropolitan area, Sydney, showed strong results, with the primary index tracking home prices rising 0.4% in May and 3.8% year-over-year. Sydney’s median property price is presently $1,684,366. Unit prices in Sydney rose 0.6% in May, with a 2.7% increase for the year, indicating a resurgence in Sydney’s apartment market.
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Other capitals, including Canberra, Hobart, Perth, Adelaide, Brisbane, Darwin, and even the smaller markets of Hobart and Darwin, have seen annual increases in housing prices. Hobart and Canberra emerged as the top monthly performers, with rises of 1.1% and 2.3%, respectively. Beyond that, Perth, Adelaide, Brisbane, and Darwin had the highest annual growth rates for unit prices in the year ending the May quarter of 2025, increasing by 14.7%, 13.4%, 13.7%, and 20.3%, respectively. The Impact of Interest Rate Cuts
Following declines in February and May of this year, the RBA has reduced interest rates for the first time in more than four years. Both of these cutbacks have greatly enhanced consumer sentiment and raised affordability concerns.
Their impact has increased market activity and driven up housing prices everywhere.
Melbourne, which had been exhibiting indications of improvement following a period of boom, announced strong results in May. For the first time since June 2023, unit prices in Melbourne have risen for more than four quarters in a row. The average unit price in Melbourne is $567,588, up 0.5% monthly and down 1.1% yearly. Outlook for 2025.
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Markets such as Perth have not shown significant development year after year, in striking contrast to the remarkable rise observed in 2023 and 2024. However, we anticipate a steady but gradual rebound in these markets starting in 2025, which is encouraging.
The latest government regulations aimed at assisting first-time home buyers may increase purchasing incentives by driving up property prices. This will increase demand from new home purchasers and experienced investors who are eager to capitalize on capital growth.Maximize your investment potential. Learn more about our loan process and how we can assist you in getting the best deal.
Finally, experts foresee a beneficial turn in the Australian property market and economy by 2025. Further interest rate cuts, combined with low new building levels, are likely to enhance the housing market, making purchases more appealing as the RBA perhaps eases the cash rate, indicating a good prognosis for property value appreciation.
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