Australian Property Market Rebounds in February 2025 Amid Interest Rate Cut

National Trends: House Prices See First Rise in Months

After three months of decline, Australian house prices rebounded in February 2025, marking a turning point for the property market. National property prices rose by 0.3%, reversing some of the losses from earlier months.

Key statistics from February’s housing data:

• The national median dwelling price reached $816,000, just 0.1% below the record high in October 2024.
• January saw a 0.4% decline in prices, but February’s positive growth has helped offset some of that drop.
• The Reserve Bank of Australia’s (RBA) 25-basis-point rate cut on February 18 significantly boosted market sentiment.

Experts suggest that improved borrowing capacity is driving the recovery, allowing more buyers to enter the market.

Capital Cities Benefit from Rate Cuts

Australia’s major metro areas were among the key beneficiaries of the lower interest rates. Property prices across Sydney, Melbourne, and other cities experienced growth as demand picked up.

Here’s how each major city performed in February:

• Melbourne & Hobart: +0.4% (Leading growth rate among major cities)
• Sydney: +0.3%
• Brisbane, Perth & Adelaide: +0.2% to 0.3%

Adelaide maintained its position as one of the country’s hottest markets, boasting a 1.2% quarterly growth rate. Market analysts attribute this to strong demand and lower stock availability.

Regional Housing Markets Outperform Capital Cities

Regional Australia continues to experience strong property price growth. Several areas outpaced the major cities, highlighting growing demand for homes outside metropolitan hubs.

Regional housing trends in February 2025:

• Regional Western Australia: +1.0%
• Regional South Australia: +0.6%
• Regional Queensland: +0.5%

The combination of affordability, lifestyle appeal, and increased remote work flexibility continues to draw buyers to regional areas.

Expert Insights: How Sentiment is Shaping the Market

Market experts believe that expectations of further rate cuts and lower borrowing costs are helping fuel this turnaround.

According to CoreLogic’s Research Director, the impact of interest rates goes beyond affordability—it plays a crucial role in shaping buyer psychology. Growing optimism among buyers has also led to:

• Higher auction clearance rates returning to long-term averages.
• Increased confidence among sellers, fostering activity in the market.
• More competition among buyers in major cities.

This trend suggests the February rebound may not be a one-off event but part of a broader recovery.

Market Forecasts: What’s Next for Property Prices?

Analysts remain cautiously optimistic about housing market growth through 2025. Several banks have released property price forecasts for the year:

• Westpac: Predicts Sydney home prices will rise 4% in 2025.
• NAB: Forecasts a similar increase of 3.7%.
• ANZ: Expects capital city prices to rise 2.7% in 2025 and 4.1% in 2026.

However, some experts caution that Sydney prices might experience a 5% decline later in the year due to slowing inflation and economic uncertainty, though the rate cut may cushion these losses.

Affordability Concerns: Can Buyers Keep Up?

While price growth offers relief for sellers, mortgage affordability remains a significant issue. Even with interest rates lowered, home buyers are still facing historically high loan repayments.

Key affordability concerns:

• Housing affordability is currently at its worst level in 30 years