Australia’s housing market has made an unexpectedly swift comeback, ending what’s now being labelled one of the shortest and shallowest downturns on record. After a modest 0.4% drop in national dwelling values between November and January, the market reversed course in February — sparked by the Reserve Bank’s first interest rate cut in over two years.
Since then, prices have surged. New data from Cotality shows dwelling values rose 1.7% across the country in the first five months of 2025. Every capital city recorded gains in May — with Perth up 0.7%, Brisbane 0.6%, Sydney 0.5% and Melbourne 0.4%.
Rodney McLoughlin explains that this rebound underscores the sensitivity of the housing market to credit conditions. Lower interest rates, greater borrowing confidence and reduced uncertainty have brought buyers back fast — especially in Sydney, where home values are just 0.3% below their 2024 peak.
Buyer Confidence Builds, Listings Rise
Auction activity reflects the trend. Crowded auctions are back, with some Sydney homes selling hundreds of thousands over reserve. FOMO (fear of missing out) is re-entering the market, with competition especially fierce in inner and southwest Sydney.
Across the board, more buyers are requesting pre-approvals and open home attendance is climbing. Rodney McLoughlin notes that sentiment is stronger than it’s been in over a year, and if rate cuts continue, prices may push even higher.
Rent Growth Eases in Some Suburbs
After years of relentless rental increases, parts of the Sydney market are finally seeing rent growth slow or plateau — particularly in suburbs with high apartment supply. This is offering modest relief to tenants, although many areas remain stretched.
PropTrack economist Anne Flaherty notes that increased investor activity is helping boost rental stock, which may gradually ease pressure in the months ahead. Still, affordability remains a critical issue for many renters, especially in premium and coastal suburbs.
More Growth Ahead?
HSBC forecasts home prices in Sydney and Melbourne could rise up to 12% by the end of 2026, with Brisbane and Perth also tipped for strong growth. McLoughlin sees continued upward pressure, especially in tightly held family suburbs and among homes under $2 million.
For buyers and renters alike, the window to act may be now — before the next leg up begins.
Real Estate Newsletter
This article is a curated summary of various news stories from the past week, offering insights and updates on the real estate market. 6 June 2025.
Rodney McLoughlin is a trusted real estate professional with deep insights into the Australian property market. For personalized advice and market expertise, reach out to Rodney today.
