Australian dwelling values rose another 0.5% in May, taking the national index 1.7% higher over the first five months of the year.
The gains were broad-based, with every capital city posting a rise of at least 0.4% through the month.
“The continued momentum we’re seeing across almost all markets is no doubt being fuelled by rate cuts – both those that have already happened, but also potential cuts in the coming months,” said Tim Lawless, Cotality’s research director, who also noted that auction clearance rates have picked up following the RBA’s May board meeting.
The rise in values comes after a short and shallow decline of just 0.4% over the three months ending January 2025, with the February rate cut a key factor supporting the positive turn in housing values.
“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.”
Despite some momentum forming in the monthly trend, in annual terms, the pace of gains in the national HVI slowed to 3.3%, the slowest twelve-month change since the year ending August 2023.
“This slower annual pace of growth reflects the easing in capital gains through the second half of last year, culminating in the modest fall in values over the three months to January 2025.”
Only Melbourne (-1.2%) and Canberra (-0.7%) have recorded an annual decline in dwelling values, demonstrating the resilience of the market through a period of relatively high interest rates and cost of living pressures.
Alongside the broad-based rise in home values, the capital city trends have shown a clear convergence. The range between the highest and lowest annual change in dwelling values, at 9.8 percentage points, hasn’t been this narrow since March 2021.
The convergence is driven by a slowdown in value growth across mid-sized capitals, while previously softer markets like Melbourne and ACT move back into growth, driving a diminishing rate of annual decline. The range in annual growth peaked in August last year with a 26.1 percentage point difference between the highest (Perth at +24.5%) and lowest (Hobart at -1.6%) annual growth rates, reflecting the most diverse growth conditions since 2007.
The rise in housing values continues to be led by lower price tiers across most cities, however, there has been some convergence here as well, as more expensive market segments start to accelerate off the back of rate cuts. Across the state capitals, Sydney and Canberra are the only capital cities where the upper quartile is showing a stronger quarterly growth trend than the lower quartile of the market, while most other capitals have seen the upper quartile of the market narrow the gap in growth rates with the lower quartile and broad middle of the market.
Regional markets are also showing a positive trend, with each of the ‘rest of state’ markets recording a rise in values through the year-to-date. The strongest gains have been in Regional SA, where values are up 5.8% over the first five months of 2025. At the other end of the spectrum, regional Tasmanian values have held reasonably flat over the same period, up just 0.1%.
CoreLogic Australia