Market turning in lagging cities as buyer demand builds

Australia’s housing market is gearing up for the spring selling season with a renewed sense of momentum, particularly in the underperforming capital cities of the past few years.

The national picture masks a striking divergence, some capital cities and regions are seeing enquiries per listing surge, while others are cooling after a period of significant outperformance.

PropTrack data on the number of enquiries per listing in July provides a timely barometer of buyer appetite. At a national level, enquiries per listing are at a three-year high, and search activity is the strongest since October 2021.

But when we disaggregate by capital city, we see a clear split between markets where demand is strengthening and those where momentum is easing.

Where demand is building

The strongest demand momentum is in Darwin, Hobart and Melbourne.

Darwin stands out as the clear leader. Buyer enquiries per listing surged almost 50% compared with last year, the highest of any capital city. In a relatively small market, shifts in demand can have outsized effects, and the breadth of this increase suggests widespread competition across Darwin’s suburbs.

Key enquiries per listing - houses

Hobart has also experienced a meaningful lift, with enquiries rising nearly 30% year-on-year. This marks a turnaround after softer conditions in recent years, underscoring how lower interest rates and limited supply are reigniting activity.

Melbourne has seen demand strengthen across more than 90% of its suburbs, with enquiries up on average 23%. After lagging other capitals, Melbourne is now attracting buyers back in force. The relative affordability of Melbourne compared with Sydney and Brisbane, combined with population growth, has restored its appeal. Houses in Melbourne are around the cheapest they have been relative to Sydney in two decades.

In regional Australia, the trend is even more pronounced. Regional Victoria and regional New South Wales are among the standouts, with enquiries per listing up by 15–30%.

Markets such as Albury, Ballarat, Bendigo and Mildura are benefitting from affordability, lifestyle appeal and hybrid work flexibility.

Where demand is cooling

By contrast, demand has cooled in the previously hottest markets.

Perth has seen the sharpest slowdown of any capital, with enquiries per listing falling 11%. After a remarkable run of outperformance in 2023 and 2024, when Perth led national price growth, buyer interest is now moderating and returning to more “normal” levels. Importantly, this easing comes from very elevated levels, so conditions remain solid but less frenzied.

Adelaide (-7%) and Brisbane (-6%) are also seeing softer enquiry levels. Both markets have experienced extraordinary growth in recent years as buyers chased affordability and lifestyle, but demand is now normalising.

Sydney is essentially flat (-1%). However, demand in the capital is bifurcated, prestige eastern suburbs such as Rose Bay, Bellevue Hill and Vaucluse continue to attract intense competition, while more affordable western suburbs like Werrington and St Marys are also highly sought after.

But across the broader city, enquiry growth has plateaued.

This cooling does not imply imminent price declines. Rather, it suggests that price growth in Perth, Adelaide and Brisbane is likely to stabilise, while Darwin, Hobart and Melbourne are set to see stronger competition and firmer upward pressure in the months ahead.

Consumer sentiment, a turning point

The demand picture is being reinforced by a shift in consumer sentiment. The Westpac-Melbourne Institute survey showed the “time to buy a dwelling” index has climbed to a four-year high. While still below long-run averages and yet to climb into positive territory, it indicates Australians are more confident about purchasing property than at any time since 2021.

Perhaps more telling, three-quarters of consumers now expect home prices to rise over the next 12 months, the second-highest reading since December 2013.

Enquiries per listing have risen nearly 30% year-on-year in Hobart. Picture: Getty

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This matters because expectations can be self-fulfilling, when households anticipate rising prices, urgency builds, and demand is brought forward, reinforcing the very price momentum they expect. Markets are not only about fundamentals but also about expectations.

Lower mortgage rates are central to this shift. Recent interest rate cuts have boosted borrowing capacity and reduced monthly repayments, giving buyers greater confidence to stretch budgets.

Auction clearance rates in Sydney and Melbourne are around their highest levels in two years after the most recent cut, signalling a resurgence in competitive bidding.

Listings and supply dynamics

On the supply side, stock remains constrained nationally, according to REA Group’s latest listings report. Tight supply continues to underpin prices, though there are important regional differences, Perth and Adelaide now have more homes available than a year ago, a factor contributing to cooling competition.

Melbourne, in contrast, remains well below last year’s levels, restricting choice and amplifying competition.

This divergence helps explain why we are now seeing a more synchronised upturn in prices across the capitals than in 2023 and 2024, as the hottest markets slow and previous laggard re-accelerate.

Policy impacts, Home Guarantee Scheme changes

The government’s decision to bring forward the expansion of the Home Guarantee Scheme to October 2025 will add further fuel to buyer demand heading into the spring selling season.

By allowing all first-home buyers with a 5% deposit to avoid lenders mortgage insurance, the scheme reduces a significant upfront cost and enables earlier entry to the market. Importantly, the removal of income caps and the lift in property price thresholds mean the scheme’s reach is far broader than past iterations.

The government has brought forward the expansion of its Home Guarantee Scheme. Picture: Getty

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While this may assist first time buyers to transition into ownership sooner than they otherwise would have, it also adds another layer of demand and reinforcing upward price pressures. As with previous first-home buyer incentives, the scheme’s benefits will be most sustainable if accompanied by policies that address the supply side of the market.

Ultimately, these measures only work sustainably if they’re accompanied by policies that increase supply responsiveness, otherwise they just shuffle the affordability problem forward in time.

Outlook for the spring selling season

As we move into the spring selling season, the outlook is one of strengthening buyer competition, particularly in Darwin, Hobart, Melbourne and the major regional centres of Victoria and New South Wales. Enquiry levels suggest that the selling season is set to be busy, auction markets will remain robust, and price growth will be supported in these cities.

In Perth, Adelaide and Brisbane, demand has eased. With more stock coming to market, these cities may shift into a period of more balanced conditions with price growth moderating rather than reversing.

The synchronisation of demand across regions signals that the housing upswing, once narrowly led by a handful of cities, is broadening. With lower rates boosting sentiment and borrowing power, and with consumers increasingly expecting prices to rise, as we enter spring, the housing market appears poised for another leg higher, albeit with important differences across cities.

Enquiry levels show that demand is strengthening in some capitals while cooling in others. While affordability remains severely constrained, the underlying market pressure of persistent housing undersupply relative to population growth remain in place. We expect home prices to continue rising in the months ahead.

With interest rates moving lower this year, momentum in the housing market has strengthened, marking a turnaround from the slower conditions observed in late 2024. Renewed buyer sentiment, supported by earlier rate cuts and the prospect of further reductions, is underpinning this recovery.