Property prices have lifted considerably in some markets since the interest-rate cut in February, with one surprising area leading the charge.
The Reserve Bank of Australia's (RBA) first interest-rate cut in four years marked a turning point in the market, boosting confidence and reigniting price growth.
But the impact has been greater in some markets, where prices have jumped by up to 6% in just three months.
PropTrack data from the past three months shows that one previously straggling market has taken the lead, with inner Melbourne now topping the charts for both house and unit growth.
House prices in inner Melbourne have risen 3.6% since the start of February, while unit prices have jumped 5.9%
Inner Melbourne faster quarterly price growth for both house and units than any other local property market in Australia, the latest PropTrack data shows. Picture: realestate.com.au/sold
While house prices in inner Melbourne are still a little lower than a year ago, units have now recorded positive annual growth.
Top 10 regions with the strongest quarterly house price growth
| Region (SA4) | 3-month price growth | 12-month price growth | |
| 1 | Melbourne - Inner | 3.56% | -1.10% |
| 2 | Darwin | 3.29% | 5.10% |
| 3 | Gold Coast | 2.97% | 6.48% |
| 4 | Barossa - Yorke - Mid North | 2.94% | 14.34% |
| 5 | Townsville | 2.83% | 21.86% |
| 6 | Mackay - Isaac - Whitsunday | 2.81% | 15.24% |
| 7 | Sydney - Inner West | 2.73% | 2.91% |
| 8 | Adelaide - West | 2.64% | 12.91% |
| 9 | Central Coast | 2.38% | 2.80% |
| 10 | Darling Downs - Maranoa | 2.14% | 13.34% |
The data covers price growth for SA4 regions, which are geographical areas defined by the Australian Bureau of Statistics (ABS) with a minimum population of 100,000 people.
It suggests Melbourne’s long-awaited recovery is now underway, with prices for homes close to the CBD growing off the back of the latest interest-rate cut.
Top 10 regions with the strongest quarterly unit price growth
| Region (SA4) | 3-month price growth | 12-month price growth | |
| 1 | Melbourne - Inner | 5.90% | 1.11% |
| 2 | Gold Coast | 2.99% | 7.19% |
| 3 | Melbourne - Inner South | 2.96% | -1.52% |
| 4 | Melbourne - North West | 2.63% | 0.67% |
| 5 | Brisbane Inner City | 2.49% | 13.71% |
| 6 | Perth - South West | 2.48% | 17.21% |
| 7 | Sunshine Coast | 2.47% | 9.89% |
| 8 | Richmond - Tweed | 2.31% | 6.07% |
| 9 | Brisbane - North | 2.26% | 15.01% |
| 10 | Townsville | 2.24% | 23.58% |
REA Group senior economist Anne Flaherty said Melbourne’s relative affordability after years of price stagnation meant more buyers were becoming active in the market.
“Home prices have underperformed the rest of the country so much and are now cheaper than Brisbane, Adelaide and on track to be cheaper than Perth,” she said.
“That’s driving a lot of people to see value on the Melbourne market.”
Melbourne prices recover as sentiment improves
Buyer sentiment towards Melbourne’s property market has been building, with REA Group’s most recent Residential Audience Pulse survey finding 40% of Victorian buyers felt it was a good time to buy a property – a higher proportion than any other state.
“We've seen a really strong turnaround in how buyers view Melbourne,” Ms Flaherty said.
More Victorians now expect prices to rise further this year, according to the latest Westpac-Melbourne Institute Index of House Price Expectations.
“Consumer house price expectations recorded a particularly big 14% rise in Victoria, coming from a markedly weaker starting point,” said Westpac head of Australian macro-forecasting Matthew Hassan.
Ms Flaherty said many investors were considering Melbourne again after the city fell out of favour in recent years due to disincentives in the form of extra taxes and costs to keep rental properties compliant with regulations.
“Despite all the disincentives, the lower price point could be driving more people to consider investing,” she said.
In the unit market in particular, the strong performance in inner Melbourne came after a period of softness due to high numbers of apartments for sale, Ms Flaherty said.
A two-bedroom apartment in this boutique Fitzroy complex sold for $685,000 in March. Picture: realestate.com.au/sold
Real estate agent and BigginScott Richmond director Andrew Crotty said more people were looking to buy as a result of February’s interest-rate cut and high rental prices.
“Last year the investors were getting out of the market, but now with interest rates dropping we are noticing they are re-entering the market, particularly with units,” he said.
“Rents are high so if you’re a first-home buyer or a young couple it’s the perfect time to jump in.”
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Nelson Alexander Flemington principal Jayson Watts said rising values meant more people were compromising on their ideal suburb to get into the market, before further rate cuts push prices higher.
“We’re getting a lot of people priced out of Fitzroy and Carlton who are coming over to Flemington and Kensington,” he said. “That hasn’t happened for about three years.”
“We’ve seen the bottom of the market and talks of further rate cuts are starting to get people thinking that in 12 months’ time it’s going to be worth more.”
Other inner-city regions have also recorded quick gains in recent months, especially in the unit market.
House prices in Sydney’s inner west have increased by 2.7%, while unit prices are up about 3% in Melbourne’s inner south and 2.5% in Brisbane’s inner city.
“Overall Greater Sydney hasn't seen particularly strong growth year-on-year,” Ms Flaherty said.
“But we had seen prices decrease in December last year and now following the February rate cut we did see a jump.”
Inner-west real estate agent and Cobden Hayson director Matthew Hayson said buyers were most active for homes in the $1.5 to $3 million range.
“A lot of the stock that’s coming onto the market in that space is selling quickly," Mr Hayson said.
“Those people are aspirationally still moving through the cycle.
“People might be coming out of an apartment, or the bank of mum and dad might be helping.
However, activity was slower for higher-value homes, he said.
“Anybody [who is] borrowing big is less confident."
High rental yields drive investors north
Another long-awaited recovery appears to be underway in Darwin, with house prices up 3.3% and unit prices up 2.2% in the past three months, which follows several years of underperformance.
Ms Flaherty said Darwin was facing an undersupply of housing, with the rate of new home construction falling behind the rate of population growth.
“There was a 44% shortfall in new homes built in FY24, and a 49% shortfall in FY23,” Ms Flaherty said. “That's one of the things that’s been underpinning Darwin.”
The Northern Territory capital was also on investors’ radars due to the potential for strong rental returns, with higher rental yields than any other capital.
“From an investing perspective, Darwin offers very high yields,” Ms Flaherty said. “The median price of home in Darwin is relatively low but the rents are relatively high.”
Top 10 regions with the strongest annual house price growth
| Region (SA4) | 3-month price growth | 12-month price growth | |
| 1 | Townsville | 2.83% | 21.86% |
| 2 | Central Queensland | 1.83% | 18.51% |
| 3 | Mackay - Isaac - Whitsunday | 2.81% | 15.24% |
| 4 | Barossa - Yorke - Mid North | 2.94% | 14.34% |
| 5 | Darling Downs - Maranoa | 2.14% | 13.34% |
| 6 | Adelaide - West | 2.64% | 12.91% |
| 7 | Toowoomba | 0.92% | 12.23% |
| 8 | Ipswich | 1.25% | 12.05% |
| 9 | Perth - North West | 0.33% | 11.91% |
| 10 | Western Australia - Wheat Belt | -0.38% | 11.63% |
The data shows prices have climbed even higher in strong markets outside the capitals.
For annual growth, Queensland regions come out on top, with six of the top 10 regions found in the sunshine state, led by Townsville – where house prices have grown by almost 22% and unit prices are up 23.6% compared with a year ago.
Prices in Townsville have jumped recently amid an investment boom. This four-bedroom house in Bushland Beach in Townsville's north sold for $875,000 in March. Picture: realestate.com.au/sold
“Townsville has been an investor hotspot over the past 12 months so that's driven a lot of funds into the area that have pushed up the prices,” Ms Flaherty said.
“Last year we saw astronomical growth, and year-on-year it’s still the best performing region in the country.”
Top 10 regions with the strongest annual unit price growth
| Region (SA4) | 3-month price growth | 12-month price growth | |
| 1 | Townsville | 2.24% | 23.58% |
| 2 | Perth - North East | 0.61% | 17.67% |
| 3 | Perth - South West | 2.48% | 17.21% |
| 4 | Perth - North West | 1.44% | 16.92% |
| 5 | Logan - Beaudesert | 1.55% | 16.18% |
| 6 | Moreton Bay - South | 1.15% | 15.38% |
| 7 | Ipswich | 1.56% | 15.06% |
| 8 | Brisbane - North | 2.26% | 15.01% |
| 9 | Moreton Bay - North | 1.16% | 14.76% |
| 10 | Brisbane Inner City | 2.49% | 13.71% |
However, while Townsville was the fifth-fastest-growing property market in the past three months, this was slower than the pace recorded last year.
“The rate of growth in Townsville has definitely slowed down,” Ms Flaherty said.
“A lot of the regions that have been the best performers over the past 12 months aren’t necessarily the ones that have been the best performers over the quarter.
“We're seeing a bit of a shift in where investors are looking.”
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