Australian home prices surge to record levels following rate cut
- March 3, 2025
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PropTrack reveals home price increases across Australia
February witnessed a rebound in the national home prices, climbing 0.4% to reach record highs, according to the latest PropTrack Home Price Index.
This rise marks a significant turnaround from the minor declines observed in previous months, with home prices now 3.94% higher than last year.
Capital cities saw a 0.45% increase, while regional areas experienced a 0.28% rise, both setting new records.
Melbourne, Sydney Rise; Hobart falls in mixed market
Melbourne and Sydney led the recovery with increases of 0.67% and 0.50%, respectively. Conversely, Hobart was the only capital to report a decrease, with a slight drop of 0.03%.
Notably, Perth, Adelaide, and Brisbane, despite their recent slowdown in growth, still posted strong year-over-year gains of 13.12%, 11.91%, and 10.21%, respectively.
Economic context and forecast
“National home prices rebounded as interest rates fell in February, reversing the soft start to the year,” said Eleanor Creagh (pictured), REA Group’s senior economist. “Market sentiment has improved now that interest rates have started to move lower.”
Following the Reserve Bank’s decision to cut the official cash rate by 25 basis points to 4.1%, the February rate cut has notably increased borrowing capacity, improved affordability, and boosted buyer confidence, thereby revitalising demand and driving up prices.
Structural factors such as sustained population growth, though moderating, and a persistent shortage of new homes continue to underpin market strength.
Looking forward, home prices are anticipated to keep rising, although further rate cuts are expected.
However, Creagh noted, “Poor affordability will likely dampen the uplift in prices compared to prior easing cycles, resulting in the pace of home price growth trailing the strong performance of recent years.”
Brisbane, Perth excel; Darwin hits new highs
In regional developments, Brisbane and Perth maintained robust annual growth rates, with Brisbane notably becoming the second-most expensive capital city, PropTrack data showed.
In Darwin, home prices reached a new peak in February, with houses outperforming units.
Melbourne’s strong performance in February contrasted with a weaker long-term trend, attributed to economic factors and higher property taxes.
Challenges in smaller markets
Hobart’s market remained tepid, with prices slightly declining for the third consecutive month but still up from the previous year.
Canberra also showed modest monthly gains but continued to lag behind its March 2022 peak levels, PropTrack reported.
Resource: brokernews.com.au