Australian property values rose again in May 2025, with the national housing market showing renewed strength and surprising consistency across all capital cities.
New data from property analytics firm Cotality, formerly CoreLogic, shows that dwelling values rose 0.5% during the month, pushing the firm’s national Home Value Index up 1.7% over the first five months of 2025.
On Cotality’s calculations, the median home in Australia is now worth $831,288, up from $825,349 in April.
“The continued momentum we’re seeing across almost all markets is no doubt being fuelled by rate cuts (from the Reserve Bank of Australia) – both those that have already happened, and the expectation of more to come,” says Tim Lawless, Cotality’s research director.
Mr Lawless also highlights the noticeable rise in auction clearance rates following the Reserve Bank’s decision to cut interest rates at its May board meeting, and he says that renewed political certainty following the Labor Party’s federal election win “is another certainty for household decision making.”
This steady climb in national housing values during 2025 comes after a brief lull in the market, with values easing 0.4% during the three months to January.
Cotality attributes the rebound to February’s initial interest rate cut, which injected fresh optimism into the property market.
“With interest rates falling again in May, we are likely to see a further positive influence flowing through to housing values in June and through the rest of the year,” Mr Lawless says.
Capital cities
Every capital city recorded growth of at least 0.4% during the month of May, with Darwin powering ahead by 1.6% to a median dwelling value of $525,770.
Perth was the next fastest-growing capital with values up by 0.7% during the month to a new median of $813,810.
Australia’s two largest housing markets, Sydney and Melbourne, saw more modest growth of 0.5% and 0.4% respectively.
However, weak growth in Melbourne over the past two and a half years has seen the difference in median home values between the two rival cities blow out to $412,092.
At $791,303, Melbourne now has the cheapest median home price of any Australian capital city, with the exception of Darwin and Hobart.
While the monthly growth trend is clearly gaining traction, annual growth remains more subdued.
Cotality’s national home value index (HVI) rose 3.3% over the past year, the slowest 12-month change since August 2023.
“This slower annual pace of growth reflects the easing in capital gains through the second half of last year,” says Tim Lawless.
Despite high living costs and elevated interest rates, only Melbourne (-1.2%) and Canberra (-0.7%) have recorded annual declines in home values, highlighting the overall resilience of the housing market.
More expensive properties rally
While more affordable housing has largely led the recovery over the past year, more expensive market segments are now showing signs of acceleration, thanks to easing borrowing costs.
Sydney and Canberra are now the only capital cities where the upper quartile of the market is outperforming the lower quartile in terms of quarterly growth.
Elsewhere, premium properties are steadily catching up to the growth seen in more affordable segments.
“Rate cuts have clearly improved borrowing capacity, and that’s now feeding into more momentum in higher-end markets,” Mr Lawless explains.
Regional markets
The uplift isn’t limited to the cities. Regional markets are also on the rise, with all “rest of state” areas posting growth so far in 2025.
Regional South Australia leads the pack with a 5.8% increase in values since January, while regional Tasmania remains the softest performer, rising just 0.1% over the same period.
The outlook
With interest rates expected to fall further in the second half of the year and population growth remaining strong, market conditions appear set for a continued steady recovery.
Cotality believes the recent rate cuts - and the likelihood of more - will support confidence among owner-occupiers and investors, especially as lending conditions become more favourable.
However, Tim Lawless says that the strength of the recovery will depend on how much further interest rates fall, “and whether affordability constraints limit buyer capacity in key urban markets.”