Rate cuts see housing market heading for above average growth in 2025

Cotality says falling interest rates are continuing to drive an acceleration of price growth in Australia’s residential property market, which the data analytics firm says is on track for a national value uplift of around 5.8% this year.

The details

Housing values rose by 0.6% in June 2025, marking a fifth straight month of growth, following a -0.3% dip seen between November 2024 and January 2025.

The rise takes the median value of an Australian home to $837,586.

Cotality says gains were recorded across almost every capital city or broad region of Australia, with Darwin (1.5%), Canberra (0.9%), Perth (0.8%) and Brisbane (0.7%) leading the way.

Sydney (0.6%) and Melbourne (0.5%) both recorded solid rises in values during June.

The median Sydney dwelling (houses and units combined) is now worth an eye-watering $1,210,222, while traditional rival Melbourne is marked by relative affordability at a median of $796,952, making it the sixth-cheapest Australian capital city in which to purchase a home.

Hobart (-0.2%) was the only major city to experience a month-on-month fall.

On a quarterly basis, national home values rose by 1.4%, following a 0.9% lift through the first quarter of the year and a -0.1% decline in the December quarter of 2024.

Except for Regional Tasmania (-0.4%), every capital city and rest-of-state region recorded a rise in values through the June quarter.

Rate cuts reignite growth

Cotality’s Research Director, Tim Lawless, says rate cuts by the Reserve Bank of Australia in February and May have been a clear catalyst for the renewed housing market momentum.

“The first rate cut in February was a clear turning point for housing value trends,” he says.

“An additional cut in May, and growing certainty of more cuts later in the year have further fuelled positive housing sentiment, pushing values higher.

“Although value rises have been broad-based, the pace of growth remains mild compared to mid-2023 when the quarterly rate of growth in national home values peaked at 3.3%, and for that matter, positively tepid relative to the extreme 8.1% quarterly peak growth recorded through the height of the pandemic,” Mr Lawless says.

However, he points out that the current housing rebound is occurring against a backdrop of relatively low home sales.

Cotality estimates housing turnover through the first half of 2025, based on sales and total dwelling stock, is tracking at an annualised pace of 4.9%, slightly below the decade-average turnover of 5.1%.

Advertised stock levels are also low, tracking 5.8% below the same time last year and 16.7% below the previous five-year average.

“Although demonstrated demand is tracking slightly below average, advertised supply is scarce, creating a more balanced market for buyers and sellers,” Cotality’s Tim Lawless says.

“Improved selling conditions can be seen in auction clearance rates, which have risen to slightly above the decade average in the last two weeks of June, holding around the mid 60% range.”

Stellar performers?

Darwin’s stellar 1.5% rise through June saw the Top-End capital put on a strong 4.9% for the quarter and a record 6.0% over the last year.

While this growth is impressive, it’s worth putting in some context.

It’s only in this month - June 2025 - that on Cotality’s figures Darwin home prices have finally reached a new record high, finally surpassing the city’s price peak recorded just over eleven years ago in May 2014 at the height of a Top-End energy boom.

With Darwin now joining Sydney, Brisbane, Adelaide and Perth, only Melbourne (-3.9% below March 2022), Canberra (-5.3% below May 2022), and Hobart (-10.2% below March 2022) are capital cities not seeing new median home value records in June 2025.

Outside of Darwin, Cotality says the quarterly trend across the capitals was led by Perth (+2.1%) and Brisbane (+2.0%), the same markets which have led the five-year growth trend, with values up an astonishing 81.1% and 75.1% respectively since June 2020.

Looking forward

Cotality’s Research Director, Tim Lawless, points out that at 3.4%, the financial year change in national home values looks quite low, but he believes the re-acceleration in growth trends over the past five months will see this rise through the second half of the year.

“Given the upside risk that housing values will accelerate further from here as interest rates reduce, the reality is we will likely see home values rise by more than this over the coming 12 months,” he says.

By annualising the quarterly pace of change, this implies a national annual growth rate of 5.8%, which Cotality says is slightly above the decade-average annual rate of 5.2%.

This is significantly above predictions by Westpac Bank in early June of just 3% growth in dwelling values across the nation and National Australia Bank’s May forecast of 3.3% price growth across the capital cities in 2025.

“However, despite the prospect for lower interest rates, affordability constraints will likely temper the extent of a housing market upswing,” Mr Lawless says.