Home values rebound at the end of the quarter after cash rate cut
Housing markets look to have moved past the recent short and shallow downturn. While the quarterly figures remained flat, housing values for the month of February saw a rebound as the RBA decreased the cash rate for the first time since November 2020.
CoreLogic’s national Home Value Index posted a broad-based rise of 0.3% in February that saw every capital increase, with the exception of Darwin, which posted a weak decrease of –0.1%.
A rebound where values were the weakest
The largest month-on-month change across the capitals was recorded in Melbourne and Hobart (both up +0.4%) where home values have previously been among the weakest. For Melbourne, the lift breaks a streak of ten consecutive months of falling home values.
Sydney recorded the second strongest increase of 0.3%. Conversely, the mid-sized capitals of Brisbane, Perth and Adelaide are no longer the strongest growth markets.
The expensive end of the market bouncing back
The return to growth across Sydney and Melbourne is being supported by the more expensive end of the market, rebounding quickly after high-value markets recorded the sharpest declines.
The regions recording growth
Regional housing conditions continued to show a stronger growth trend relative to the capital city counterparts, with values across the combined regionals index rising 0.4% over February and 1.0% over the quarter – compared to the capital city values which recorded a 0.3% monthly rise and a -0.4% quarterly fall.
Borrower sentiment leading the uptick
In the March CoreLogic report Tim Lawless said the improved housing conditions have more to do with improved sentiment than any immediate improvement in borrowing capacity.
“Expectations of lower interest rates, which solidified in February, look to be flowing through to improved buyer sentiment.”
Declining supply of listings and new homes being built
Improved market conditions may also be reflecting a slowdown in the amount of ‘for sale’ listings. New listings across the combined capitals were -4.7% lower than a year ago.
Low levels of new housing construction are also anticipated to support housing values, with multi-unit dwelling construction in particular, well below the average.
Expectations of a drawn-out cash rate
The most recent CoreLogic report noted that the rate-cutting cycle is very fresh and is likely to be drawn out. Lower mortgage rates are positive for housing markets, supporting a rise in borrowing capacity and serviceability assessments, but despite the recent rise, the cash rate is anticipated to remain relatively low for the near future which is anticipated to limit growth.
Dwelling values over the quarter
Melbourne
The Victorian capital posted a -1.1%t quarterly move according to CoreLogic figures, taking the city’s median dwelling price to $772,561. Investors should take note that the gross rental yield figure for Melbourne now sits at 3.7%.
Sydney
In the three months to February’s end, Sydney experienced a dwelling value change of -0.9% resulting in a median of $1.186 million. The gross rental yield for the Harbour City is currently the lowest of the capitals at 3.1%.
Brisbane
The Queensland capital has again recorded the second most expensive spot for dwelling values at $894,425, and a quarterly rise of 0.9%. Brisbane has recorded a gross rental yield of 3.7%.
Canberra
The national capital recorded a decline of -0.8% during the quarter with the median now sitting at $846,955. For Canberra, the gross rental yield is 4.1%.
Perth
Continuing its lead as the best-performing capital over the quarter, Perth jumped 3% for the second quarter in a row, taking its medium to $807,933. Perth recorded 4.3% gross rental yield.
For more information about how you might be able to purchase a property in the current market, get in touch with us today.
Note: all figures in the city snapshots are sourced from: CoreLogic’s national Home Value Index (March 2025)
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