Australian property values have surged to new record levels in March, marking a significant turnaround from the recent declines seen earlier this year. CoreLogic’s national Home Value Index reported an overall increase of 0.4 per cent for the month, indicating that property values have appreciated for the second straight month following a three-month downturn that saw values drop by 0.5 per cent.
This positive shift in the market has been observed across nearly all major capital cities, with the sole exception of Hobart, where property prices declined by 0.4 per cent. Darwin experienced the most notable rise, with values increasing by 1 per cent. Analysts attribute the revival in property values largely to improved market sentiment following a rate cut in February, along with a boost in borrowing capacity and mortgage serviceability.
However, experts express caution regarding the sustainability of this positive trend, especially as the rate-cutting cycle is expected to continue. While the momentum is encouraging, affordability issues could pose challenges moving forward. Notably, both Sydney and Melbourne’s property prices remain below their historical highs, with Sydney values still 1.4 per cent under their peak, despite a significant decline of 2.2 per cent recorded from September 2024 to January 2025. Similarly, Melbourne’s prices are 5.6 per cent beneath their previous highs, despite recent increases.
In smaller capital cities, the pace of growth has also slowed. For instance, Perth, which has seen a remarkable increase of 75.4 per cent since March 2020, now sits just 0.05 per cent below its peak recorded in October 2024.
On the rental front, prices are reaching new highs, with the national rental index climbing 0.6 per cent in March. Hobart once again led the increase with rents rising by 1.2 per cent, while Melbourne experienced the lowest rental growth at 0.3 per cent.
In summary, while the current data depicts a rebound in the Australian property market, experts advise close monitoring of the situation, particularly regarding potential affordability constraints that could affect future growth.