Housing values continue buoyant run through May

Australian dwelling values continued their upward swing in May off the back of successive RBA rate cuts, with broad-based gains recorded across every capital city in the country, property data analyst Cotality (formerly CoreLogic) has revealed in its latest Home Value Index (HVI).

Dwelling values grew a further 0.5% this month, taking the national index 1.7% higher over the first five months of the year (with 1.3% recorded for the last quarter).

The gains were broad-based, with every capital city posting a rise of at least 0.4% through the month.

The rise in values follows what Cotality describes as a “short and shallow” decline of 0.4% over the three months to end of January 2025.

The February rate cut – as well as the promise of further cuts through this year – has in large part driven this positive turn, Cotality argues.

However, on annual terms, the HVI remains sluggish, recording its slowest 12-month change – at +3.3% – since the year ending August 2023. The combined capitals rate of growth was even slower, recording just 2.6% growth over the year.

“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,” said Cotality research director Tim Lawless.

From its price peak in September 2024, Sydney has retreated by 0.3%. Melbourne prices, which peaked in March 2022, have declined by 4.5%.

However, only Melbourne and Canberra recorded annual declines in dwelling values, down 1.2% and 0.7%, respectively, “demonstrating”, Cotality says, “the resilience of the market through a period of relatively high interest rates and cost of living pressures”.

Capital convergence

Capital city dwelling values have shown a “clear convergence”, Cotality found, with the range between highest and lowest annual change in values – 9.8 percentage points – at its narrowest point in more than four years. The range in annual growth peaked in August 2024, with a 26.1 percentage point difference between the highest (Perth) and lowest (Hobart) annual growth rates.

“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.”

Overall, Cotality concludes, house values are expected to see modest gains through 2025 – albeit at a slower pace than recorded in 2024. While another round of rate cuts will keep housing demand bubbly, ongoing affordability pressures, as well as restrictive lending policies, are likely to keep a cap on housing values.