Real Estate
Australian home prices have reached new record levels, with a 0.39 per cent increase in May marking the fifth consecutive month of growth.
PropTrack’s latest Home Price Index shows prices have risen by 4.12 per cent year-on-year, with capital city markets at the forefront of this surge – recording a collective rise of 0.45 per cent.
All capital cities experienced price increases, with Sydney, Brisbane, Adelaide, Perth, and Darwin achieving new price peaks.
Melbourne recorded the strongest monthly growth at 0.79 per cent, indicating a recovery from a period of weaker performance.
Despite this, Melbourne’s home values remain 2.85 per cent below their peak.
In a notable development, Perth’s median home value surpassed Melbourne’s for the first time in a decade, reaching $787,000 compared to Melbourne’s $782,000.
This shift underscores Melbourne’s relative weakness and Perth’s sustained outperformance.
Adelaide led annual growth among the capitals with an 11.04 per cent increase, followed by Perth at 8.40 per cent and Brisbane at 8.38 per cent.
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Source: PropTrack
While these cities continue to lead in annual growth, momentum is building in Melbourne, Canberra, and Hobart.
Regional areas also saw growth, with prices rising by 0.25 per cent in May and an annual increase of 5.19 per cent, outpacing the combined capitals’ growth of 3.71 per cent.
Regional prices are now 65 per cent higher than five years ago.
REA Group senior economist Eleanor Creagh said the rise in home prices was largely driven by falling interest rates.
“With interest rates falling, price momentum has increased and broadened, with all capitals seeing prices lift in May,” she said.
“Price growth across the capitals is starting to converge. Melbourne, which previously lagged the other capitals, is now seeing home price growth pick up.
“Cities such as Perth and Brisbane are now seeing growth moderate after strong outperformance.”
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REA Group senior economist Eleanor Creagh
She adds that the growth seen in all capital cities was underpinned by improved buyer sentiment.
“Lower interest rates have lifted borrowing capacities and boosted buyer demand. And with further price increases and rate cuts expected, prospective buyers are moving off the sidelines and accelerating their purchasing decisions,” Ms Creagh said.
“Looking ahead, while stretched affordability will remain a constraint, a chronic lack of new housing supply, population growth, and targeted buyer incentives are expected to keep upward pressure on prices.
In combination with interest rates continuing to move lower, these factors are likely to drive further price growth throughout the remainder of 2025.”
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