Home prices across the country climbed in March, following a clear shift in market momentum triggered by the Reserve Bank’s February rate cut.
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.
Key findings from the March 2025 report:
• National home prices rose 0.27% in March, pushing values to a record high. Prices are now 3.91% higher than a year ago and up 48% over the past five years.
• Capital city markets led the monthly gains, with prices rising 0.31%, while regional markets saw a 0.18% increase. Both markets hit new peaks in March.
• Canberra (+0.54%) and Sydney (+0.47%) led price growth this month, while Brisbane (+0.07%), Adelaide (+0.18%), and Perth (+0.15%) saw more modest increases. Despite this, these three markets remain the top performers over the past year, with values up 9.39%, 11.32%, and 11.53%, respectively.
• The strongest turnaround in quarterly price growth was recorded in Melbourne, Canberra and Sydney. These markets saw a notable uplift in momentum in early 2025, following slower conditions at the end of 2024.
• In contrast, growth has decelerated in Adelaide, Brisbane and Perth over the same period.
• While capital cities are now leading the price rebound, annual growth in regional areas (+4.59%) continues to slightly outpace capital city growth (+3.64%). Poor affordability and a surge in choice throughout spring tempered price growth in the capitals in 2024, but February’s rate cut reignited buyer demand and price growth.
Home prices rebound to record highs as interest rates fall in March
National home prices continued their upward trend in March, building on February’s rebound.
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. 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.
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The Reserve Bank of Australia cut interest rates for the first-time in four years in February. Picture: Damian Shaw
Though in isolation, this one 25 basis point rate cut may only increase the average person’s borrowing capacity by about 2-3% (exact impact on borrowing capacity will vary based on individual financial circumstances like income level, existing debt, loan term etc.), sentiment also plays a role, as spending decisions are also governed by sentiment and confidence.
The slight improvement to affordability and expectations of future price growth also drive buyer confidence.
Capital cities lead the rebound in prices
Annual price growth in regional areas (+4.59%) outpaced the capital cities (+3.64%) in March as poor affordability and a surge in choice through spring tempered price growth in the capitals through 2024.
Though after leading the small falls in recent months, capital cities continue to lead the bounce in prices, lifting 0.31% in March. In contrast, regional areas recorded a 0.18% rise in prices over the month.
Prices in both capital cities and regional areas are sitting at record highs.
House and unit prices fall in January
Nationally house prices lifted 0.22% in March, while unit prices nationally rose 0.53%.
National house prices have lifted 3.78% over the past year, growth in unit values (4.51%) has been stronger through the same period.
Though since the pandemic onset house values are up 53% vs. just 28% for units. This highlights the stronger performance of houses over the medium term, driven by increased demand for space and land during and after the pandemic.
After a significant revaluation of space favouring house values since the onset of the pandemic, affordability pressures, as well as the rejuvenation of city living has left price growth at the national level across property types broadly comparable over the past two years.
Annual price performance remains mixed across Australia
Markets in regional Queensland, SA and WA continue to record strong growth. Despite moving lower this month, interest rates have been sustained at high levels for much of the past year, and home prices have risen significantly in recent years whilst growth in household incomes has not kept up with these increases, as a result affordability has deteriorated significantly.
Generally, across the capital cities more affordable regions have outperformed over the past year, with strength in home buying demand buoyed in these regions as buyers push down the value chain. And the more affordable regions within each city like Adelaide’s north, Ipswich, and Perth’s northwest and south have seen rapid price increases.
Busselton in Western Australia has been one of Australia's strongest regional markets over the past year. Picture: realestate.com.au/sold
Last month, the Reserve Bank cut the cash rate 25 basis points to 4.10% and market sentiment has improved now that interest rates have started to move lower, boosting borrowing capacities and increasing buyer’s purchasing power.
The strongest turnaround in quarterly price growth was recorded in Melbourne, Canberra and Sydney. These markets saw a notable uplift in momentum in early 2025, following slower conditions at the end of 2024.
Melbourne and Canberra saw subdued conditions for much of 2024, so the recent rebound partly reflects a catch-up effect from earlier price weakness. While Sydney saw conditions slowing in the second half of 2024, Sydney also remains the most interest rate sensitive market with a high reliance on leverage meaning February’s rate cut has been a key catalyst in the turnaround in home price growth.
In contrast, growth has decelerated in Adelaide, Brisbane and Perth over the same period. These markets saw persistently strong growth in 2023–24 but have lost momentum after sustained growth. Buyer demand may be moderating naturally as prices stabilise and prices may now be hitting affordability ceilings, particularly in areas where incomes haven’t kept pace.
Though the pace of growth has slowed over the past year, Perth remains the top performing capital for annual home price growth (+11.53%), with the comparative affordability of the city’s homes, strong population growth and limited new housing supply contributing to the persistently strong growth of recent years.
Outlook
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.
Beyond interest rates, structural factors are continuing to support price growth. 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.
We expect prices to keep lifting over the coming months, but the rate of growth is likely to be more modest compared to recent years. With affordability still a major constraint, the impact of further rate cuts will be somewhat tempered.
* The PropTrack Home Price Index measures the monthly change in residential property prices across Australia to provide a current view on property market performance and trends. PropTrack Home Price Index uses a hybrid methodology combining repeat sales with hedonic regression. The repeat sales method matches resales of the same property while the hedonic regression estimates values based on the value of similar properties. The hybrid model allows two properties in the same Australian Bureau of Statistics Statistical Area 1 (SA1) region, of the same type, to be matched and controls for differences in property characteristics, as in a hedonic regression. The PropTrack Home Price Index is a revisionary index with the whole back history updated monthly with current transaction information.
** This report uses realestate.com.au internal data and data sourced from third parties, including State government agencies. It is current as at the time of publication. This report provides general information only and is not intended to constitute any advice and should not be relied upon as doing so. If you wish to cite or refer to this report (or any findings or data contained in it) in any publication, please refer to the report as the ’PropTrack Home Price Index Report – July 2024’. See report for Copyright and Legal Disclaimers.