Login
ISCOVER
Falling interest rates have lifted demand to push home prices higher, recovering from a slowdown at the end of 2024, new Cotality research shows.
Cash rate cuts have started to unlock higher housing demand and increase home values, according to Cotality (formerly CoreLogic).
Cotality’s Pain and Gain Report found national home values lifted 1.3 per cent in the three months to May, accelerating from a 0.9 per cent rise in the March quarter.
In late 2024, stretched affordability, elevated interest rates, cost-of-living pressures, and softer overseas migration all weighed on housing demand, pushing home values lower, Cotality said.
However, cash rate reductions in February and May have boosted housing demand, reigniting slowing growth in home values at the very start of the year.
Regional home prices outperform capitals
Home value growth in regional Australia has continued to surpass the capitals this year, with regional values rising 2.6 per cent year to date, versus 1.6 per cent across the capitals, according to Cotality.
Since the onset of the pandemic, regional markets have consistently achieved larger value increases for dwellings.
From March 2020 to March 2025, regional home values climbed 58.7 per cent, well ahead of the 35.2 per cent increase across capital cities.
Beyond the capitals, some of the strongest capital gains have emerged from lifestyle-driven regional markets, including regional hotspots such as Noosa, Busselton, Grant, and the Sunshine Coast.
The outsized gains reflect not just price growth, but the enduring appeal of lifestyle locations through and beyond the pandemic, Cotality said.
In Augusta Margaret River and Busselton, dwelling values have more than doubled.
Units underperform on price
Cotality highlighted a ‘persistent underperformance’ in the unit sector: over the decade to March 2025, national house values rose 80.2 per cent, more than twice the 37.7 per cent gain in unit values.
Cotality’s head of research Eliza Owen said the trend could be attributed to a number of unit markets being weighed down by oversupply and weak growth.
“Several large apartment markets that saw a building boom in the late 2010s have yet to recover materially,” Owen said.
Notably, more than one in four unit resales that made a loss occurred in just four local government areas (LGAs) (Melbourne, Parramatta, Port Phillip, and Stonnington), where nominal unit values have grown by just 2.0 per cent on average over the past decade.
Profitability poised to rise
The share of profit-making home sales has broadly moved with the trend in home value changes.
For the March quarter, Cotality data showed the portion of profit-making sales nationally was 94.9 per cent, holding steady on the December result.
Despite the share of profitability remaining stable, the median profit dropped to $305,000 from $310,000 in the previous quarter. The decline marked the first financial quarter since March 2023 that median nominal gains fell.
The rate of profit-making resales was once again higher across the regions (96.5 per cent) than in capital cities (93.9 per cent), which has been the case since the March quarter of 2019.
Profitability improved across the unit sector from 89.9 per cent in the previous quarter to 90.1 per cent. Profit-making resales across the house sector remained steady over the quarter, at 97.2 per cent.
Looking ahead, Cotality said that as housing markets have experienced an upswing through the start of the year, the rate of profit-making sales is expected to shift higher in 2025.
Cotality’s Owen said the research reflected a housing market in transition, with profitability poised to rise further following February and May rate cuts, which have already reignited demand.
“Although profitability held steady in early 2025, we’re seeing clear signs of renewed momentum. With rate reductions now flowing through to buyer demand and value growth, we expect stronger resale returns in the months ahead,” Owen said.
“Profit-making resales closely followed home value trends, with profitability dipping slightly as prices softened late last year. But that pullback has already reversed.”
[Related: Average home price tops $1m as housing crisis deepens]
JOIN THE DISCUSSION