All capitals post monthly growth as rate cuts spur demand
Australian housing values continued to edge higher in May, with the national index rising by 0.5%, bringing the year-to-date gain to 1.7%, according to new data from property research group Cotality.
The increase was seen across all capital cities, each recording a minimum growth of 0.4% during 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 (pictured above), research director at Cotality. He added that auction clearance rates had strengthened since the Reserve Bank of Australia’s May decision.
The market rebound follows a small dip of 0.4% in values over the three months ending January. February’s rate cut marked a turning point, with momentum building again in subsequent months.
“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,” Lawless said.
While monthly gains are holding firm, the annual growth rate of the national Home Value Index has slowed to 3.3% — the lowest annual figure since 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,” Lawless said.
Only Melbourne and Canberra posted annual declines, down 1.2% and 0.7% respectively, amid ongoing cost of living pressures and elevated borrowing costs.
Cotality also highlighted a notable narrowing in value performance across capital cities. The gap between the strongest and weakest annual performers now sits at 9.8 percentage points — the tightest spread since March 2021.
This comes as mid-sized cities experience a cooling in growth, while weaker markets such as Melbourne and Canberra show early signs of stabilising. Last August, the difference between top and bottom performers was 26.1 points, marking the most varied conditions since 2007.
Lower-priced properties continue to lead the upswing, though more expensive market segments are starting to catch up. Sydney and Canberra are now seeing stronger quarterly growth in the upper quartile of the market, compared to lower-value segments. In other capitals, the gap in performance between high-end and entry-level homes is also narrowing.
Outside the capitals, regional housing values are also trending upward. All state regions posted gains in 2025 so far. Regional South Australia led the way with a 5.8% rise, while regional Tasmania showed minimal change, increasing just 0.1% over the same period.
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