The recovery was broad-based, with every capital city and regional market except Darwin (-0.1%) and Regional Victoria (flat) recording gains.
The largest month-on-month growth was seen in Melbourne and Hobart, both rising 0.4%. Melbourne’s increase was particularly notable, as it broke a ten-month streak of falling home values.
Meanwhile, Brisbane, Perth, and Adelaide, which had been the strongest growth markets in 2024, saw more modest gains between 0.2% and 0.3%.
Despite this slowdown, Adelaide (1.2%) and Brisbane (0.9%) continued to lead in rolling quarterly growth trends, while Perth’s quarterly growth slowed to just 0.3%.
The return to growth in Sydney and Melbourne has been driven by the upper quartile housing market, which had previously seen the sharpest declines. This trend aligns with historical patterns, where premium markets tend to respond first to interest rate expectations. CoreLogic’s research director, Tim Lawless, attributed the change in sentiment to growing expectations of lower interest rates in the coming months.
“Expectations of lower interest rates, which solidified in February, look to be flowing through to improved buyer sentiment,” Mr Lawless said.
“Along with the modest rise in values, we have also seen an improvement in auction clearance rates, which have risen back to around long-run average levels across the major auction markets.”
Regional markets remain strong, but supply is tight
Regional housing markets continued to outperform capital cities, with values across combined regional areas rising 0.4% in February and 1.0% over the rolling quarter.
In contrast, capital city values saw a -0.4% decline over the quarter. However, growth in regional markets was not uniform, with cities like Sydney, Melbourne, and Hobart outpacing their surrounding regional areas.
Adding to the tightening supply situation, new property listings fell by 4.7% compared to a year ago, and were 1.5% below the five-year average. While total advertised stock levels were slightly higher than last year (up 1%), they remained 7.9% below the previous five-year average, potentially contributing to upward pressure on prices.
“Although total advertised supply levels are almost 1% higher than a year ago, listings remain -7.9% below the previous five-year average and the reduced flow of fresh stock to market could be supporting some upward pressure on prices, especially if buyers are becoming more active amid higher sentiment and lower rates,” Mr Lawless said.
Land market sees increased activity
The turnaround in established home values is also having knock-on effects on land markets, with demand for new land increasing. According to Oliver Hume Chief Economist Matt Bell, February saw a strong rise in new land enquiries, as buyers began factoring in anticipated rate cuts.
“A resurgent established house market has had knock-on impacts for land markets around the country, with Oliver Hume’s February new land enquiry up strongly as consumers digest the latest rate cut and prepare for more,” Mr Bell said.
“We are expecting increased sales volumes and rising prices across all land markets in 2025, particularly in the second half, as rate cuts work their way through household finances and balance sheets.”
Mr Bell also suggested that Victoria’s land market could see the biggest upside, as it becomes more competitive relative to the established housing market.
“Increased activity depends not only on rate cuts but also on a stronger competitive position relative to the established housing market, and rising house prices are the key driver of this equation,” he said.
More growth to come?
While February’s rate cut did not have an immediate impact on affordability, the expectation of further cuts in 2025 is already driving increased market activity. The market now expects two or three additional cuts before the end of the year, with the first likely to come in May or July.
Mr Bell believes that price growth in Melbourne is likely to strengthen, while Sydney’s market will remain stable. However, Brisbane, Perth, and Adelaide, previously the country’s strongest performers, may experience more moderate growth rates moving forward.
“Given the strong historical relationship between interest rates and dwelling values, it was no surprise to see the market returning to price growth at the national level, ending a three-month downturn,” he said.
“Our expectation remains for the high dwelling price growth experienced in Perth, Adelaide and Brisbane to ease, Sydney to remain about the same, and Melbourne to continue to move from falling prices to price growth.”
