Home values reach record heights following February interest rate cut

Australian property values have climbed to unprecedented levels in March, breaking new records after a brief decline period.

CoreLogic’s national Home Value Index reported a 0.4% increase during the month, marking the second consecutive month of growth following a three-month slump where values had fallen 0.5%.

The upward trend was widespread across almost all regions, with every capital city except Hobart recording positive growth, along with all rest-of-state areas.

Darwin led capital city gains with a 1.0% increase, while Hobart was the only capital to experience a decline, falling 0.4%.

CoreLogic Research Director Tim Lawless attributed the turnaround primarily to improved market sentiment following February’s interest rate reduction.

“Improved sentiment following the February rate cut is likely the biggest driver of the turnaround in values, along with the cut’s direct influence of a slight improvement in borrowing capacity and mortgage serviceability,” Mr Lawless said.

He questioned whether the positive trend could be sustained amid affordability challenges, noting that “with the rate-cutting cycle expected to be drawn out, it will be interesting to see if this positive inflection in values can last in the face of affordability constraints.”

Australia’s largest property markets of Sydney and Melbourne have shown signs of recovery, with both cities recording value increases over the past two months.

Sydney home values remain just 1.4% below their record high after falling 2.2% between September 2024 and January 2025.

Melbourne values, despite rising 0.9% over the past two months, still sit 5.6% below their March 2022 peak following a prolonged downturn.

Growth in mid-sized capitals has continued but at a noticeably slower pace, particularly in Perth where recent downward revisions have placed values marginally below their October 2024 peak levels.

Perth has been the standout performer among capital cities over the past five years, with values surging 75.4% since March 2020.

The pattern of growth across different price segments of the market has begun to even out after a period where lower-priced properties had outperformed.

This trend was most evident in Sydney, where upper quartile values increased by 0.6% over the past three months compared to a 0.3% rise in the lower quartile.

Regional markets maintained their edge over capital cities with a 0.5% increase compared to the capitals’ 0.4% gain, though the gap appears to be narrowing as capital city growth accelerates.

The strongest regional growth areas were concentrated in Western Australia and Queensland, with WA’s Mid-West region (including Geraldton) recording the highest annual growth at 25.4%.

Queensland regions dominated the remainder of the top performers, with Townsville (23.5%), Gladstone (22.2%), Central Highlands (21.8%), and Mackay (20.2%) all experiencing substantial annual growth.