Home prices are back in record territory, rebounding from a brief downturn thanks to a long-awaited rate cut boosting buyer demand and pushing prices higher in every capital city.
PropTrack’s Home Price Index posted a 0.27 per cent national rise in March, after a modest 0.3 per cent increase in February ended a three-month easing in prices — and a back-to-back rate cut today could spark another surge.
REA Group senior economist Eleanor Creagh said it was a major turnaround from the downward trend that had looked to be taking hold, and a clear shift in market momentum triggered by the Reserve Bank’s 0.25 per cent interest rate cut in February.
PropTrack’s Home Price Index for March shows home prices nationally rose 0.27% during the month. Picture: Monique Harmer.
RELATED: Up $96k in a year: Home prices rise as buyers eye rate cuts
“February’s rate cut boosted borrowing capacities and buyer confidence, helping to reignite demand and reverse the small price declines seen in the months prior,” Ms Creagh said.
“Market sentiment has improved and buyers who had delayed purchasing decisions due to the sustained higher interest rate environment are likely re-entering the market.”
All capital cities recorded price rises over the month, with Canberra (+0.5 per cent) and Sydney (+0.5 per cent) leading the growth.
Prop Track senior economist Eleanor Creagh.
MORE: Shock pay rise you’ll need to keep up with home price rises
Victorian homebuyers will need thousands more in income to afford units by 2026
Melbourne (-2.26 per cent) was the only capital city to decline year-on-year, while Adelaide (+11.3 per cent), Perth (+11.5 per cent) and Brisbane (+9.4 per cent) saw the biggest price increases annually.
Regional areas also remained at peak levels, recording a 0.2 per cent rise over the month to sit almost 5 per cent higher year-on-year.
The Reserve Bank will announce its next interest rate decision on April 1, with the majority of economists expecting the central bank to keep the cash rate on hold at 4.1 per cent.
Brisbane home prices rose a tenth of a per cent in March. This house at 2 Boston St, Clayfield, recently sold for $5.8m.
But, three of the big four banks still expect three more cuts in 2025, with the next tipped for May.
Ms Creagh said she expected the next cut to be in May, with home prices to continue to lift in the coming months, but the pace of growth to be “more modest compared to recent years”.
“With affordability still a major constraint, the impact of further rate cuts will be somewhat tempered,” she said.
Sydney home prices rose in March. This apartment at 56/7-59 Macquarie St, Sydney CBD, recently sold for $6.8m.
“Population growth remains strong — though it is beginning to moderate — and Australia continues to face a significant shortage in new home completions, however, stretched affordability remains a major challenge and will only improve gradually, given the modest and measured rate reductions expected ahead.”
Ray White chief economist Nerida Conisbee said the nation’s housing market had shown “resilience” after a brief downturn and were now continuing their upward trajectory — at a more moderate pace.
The RBA is expected to keep interest rates on hold at its April meeting. Picture: Joel Carrett.
“The resilience of Australia’s housing market reflects the fundamental undersupply that
continues to characterise our market,” Ms Conisbee said.
“While global economic challenges create uncertainty, the structural factors supporting Australian property prices remain firmly in place.”
Ms Conisbee said further softening in the jobs market could provide the next impetus for the RBA to cut rates again.
Another quarter of a per cent cut would slash $91 from a borrower’s minimum monthly repayments on a $600,000 loan with 25 years remaining, assuming they are on the average rate of 6.06 per cent, according to Canstar.
February’s interest rate cut has spurred momentum again in the housing market. Picture: Gaye Gerard.
Canstar.com.au’s data insights director Sally Tindall said February’s rate cut was a “one hit wonder” for now.
“While inflation has continued to make good progress, it will not be enough to force the RBA’s hand into back-to-back cuts, particularly in light of recent global volatility, including the Trump tariffs,” Ms Tindall said.
“The RBA often cuts in quick succession because it’s under pressure. Not this time around. Australia’s robust unemployment rate of 4.1 per cent and the most recent GDP results give the central bank plenty of leeway.
“If you’ve got a mortgage, plan to get a rate cut yourself rather than relying on the RBA to plate one up.”
Ray White New South Wales head of auctions Perry Edmondson-Clark said buyers were out in force at auctions at the weekend and throughout March.
“Preliminary data is showing on average four registrations per auction with competitive bidding,” Mr Edmondson-Clark said.
“There is plenty of commentary around what the market might look like over the next few months; we have Easter and ANZAC Day long weekends as well as a Reserve Bank rate decision.
“Despite all the distractions, stock volume remains consistent and buyer activity is strong.”
English (US) · 