Login
ISCOVER
The RBA’s decision to lower the cash rate in February has fuelled an increase in housing values, according to Cotality.
Australian dwelling values continued to climb in May as the February interest rate cut supported an uptick in housing demand, which drove an increase in housing prices, according to Cotality (formerly CoreLogic).
Cotality’s Home Value Index (HVI) rose 0.5 per cent in May, taking the national index 1.7 per cent higher over the first five months of the year.
Gains were geographically widespread and included a rise of at least 0.4 per cent through the month for every capital city.
The increase in values came after a short and shallow decline of 0.4 per cent over the three months ending January 2025.
Cotality’s latest national HVI for May found some momentum forming in the monthly trend, but annually, the pace of gains eased to 3.3 per cent, the slowest 12-month change since the year ending August 2023.
“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 Cotality’s research director Tim Lawless, who also noted that auction clearance rates have picked up following the RBA’s May board meeting.
“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.”
Commenting on easing annual growth in the HVI, Lawless said: “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.”
Capital housing prices converge
Dwelling prices in capital cities have shown a clear convergence, according to Cotality.
The range between the highest and lowest annual change in capital city dwelling values is 9.8 percentage points, the narrowest it has been since March 2021.
That shift is being driven by a slowdown in value growth across midsized capitals, while previously softer markets like Melbourne and the ACT moved back into growth, driving a diminishing rate of annual decline.
Among the capitals, only Melbourne (-1.2 per cent) and Canberra (-0.7 per cent) recorded an annual drop in dwelling values.
Regional markets have shown growth, with each of the rest of state markets recording a rise in values through the year to date.
Price growth forecasts cool
Cotality highlighted a “mix of potential positives and negatives at play” impacting housing prices going forward.
The prospect of lower interest rates is expected to buoy demand and an undersupply of housing is likely to keep some upward pressure on housing values.
However, lower rates are also likely to embolden prospective sellers and support new housing supply, Cotality said.
Climbing housing prices could worsen already strained housing affordability and potentially drive more first home buyers to consider investment properties over owner-occupied homes as their entry point into the property market.
Overall, Cotaility said that housing values are expected to continue rising in the short term, albeit at a slower pace than in early 2024, with the outlook subject to change as global and domestic events unfold.
“Given the softer trajectory of growth through last year, it’s likely the annual pace of gains will continue to soften over the coming months, despite the positive inflection in values since February,” Lawless said.
[Related: Record-high house prices raise affordability fears]
JOIN THE DISCUSSION