Recent strong growth in more expensive suburbs - particularly in Sydney and Melbourne - could point to a wider pick up in property markets nationally.
New data from CoreLogic shows renewed momentum in these so-called 'bellwether’ markets, following the Reserve Bank of Australia’s decision in mid-February to lower interest rates by 0.25% - the first cash rate reduction in nearly four-and-a-half years.
The data analytics firm says these more expensive areas have historically proven to be an early indicator of overall property market upturns.
The details
CoreLogic's latest Housing Chart Pack shows that the upper quartile (or more expensive segment) of capital city property markets with the top 25% of home values, rose 0.2% in February 2025.
That’s a sharp turnaround, following a 0.3% fall in January.
"The upper 25% of values in Melbourne, Sydney and Hobart - which our research shows have historically been some of the most sensitive to rate changes - recorded the largest improvements," CoreLogic Economist Kaytlin Ezzy says.
"The top quartile is the one to watch, as (those markets) tend to be a bellwether for broader market recoveries in those cities."
Ms Ezzy says that, historically, Sydney and Melbourne houses and units generally have the most to gain from a reduction in interest rates and that appears to be reflected in February's data.
"In Sydney and Melbourne, but also Hobart, many of the markets with a solid response to rate reductions are also seeing values well below their peak under recent interest rate rises, so easier access to credit may trigger a recovery trend in these markets."
In Sydney, the area known as “Eastern Suburbs - North market” - which includes the harbourside suburbs of Point Piper, Double Bay and Rose Bay - grew 2.0% in February after falling 0.5% in January, marking a 2.5% turnaround in just a month.
The Hornsby area in the city’s north saw a big lift as well, with CoreLogic calculating values rising 1.1% in February, and posting a 2% turnaround from the previous month.
Kaytlin Ezzy says these markets have traditionally responded strongly to changes in financial conditions.
"It is possible that these kinds of markets have a stronger response to cash rate falls because people generally need more finance to buy into them.
"However, the RBA Board minutes and statement in February were fairly hawkish despite the rate cut, so there is some uncertainty as to whether the recent momentum will continue."
Similarly, in Melbourne, the biggest turnaround in capital growth occurred in Stonnington East, the area which includes the wealthy suburbs of Malvern, Malvern East and Glen Iris.
That saw a 1.9% drop in January translate into a 0.8% lift in February - a huge 2.64% turnaround.
CoreLogic says other high-end Melbourne markets like Manningham East, Bayside and Glen Eira also showed a strong reversal in fortunes.
In Hobart, the city’s North East region, which sits towards the high-end of the local market, saw the highest capital growth turnaround in the city in February.
CoreLogic’s latest monthly Home Value Index figures show Hobart and Melbourne led monthly gains among the capital cities.
Both recorded 0.4% growth in February 2025, a sharp bounce back in two cities where home values have recently been among the weakest.
Affordable markets still dominate
While these gains in some of Australia’s most expensive property markets are noteworthy, it’s worth remembering that they are currently still being outperformed by “lower quartile” or affordable segments of capital city property markets.
CoreLogic says these lower quartile markets rose 0.4% in February, following a flat result in January.
A glance at the chart above also shows that growth in lower value markets in Australia’s capital cities has been much more stable over the past ten years, compared to the volatile see-sawing nature of upper quartile property markets.
Nevertheless, a pick up at the “top-end of town” usually signals the start of a strong upward price trend across entire markets.
Kaytlin Ezzy says that, overall, property markets have had a strong response to the RBA’s decision to cut interest rates in February, with a lift in the daily trend of CoreLogic’s national Home Value Index prior to the cut.
"This suggests sentiment was also at play," she says.
"If buyers are out in the market expecting they can access more finance, this may have contributed to a strong market response."