AUSTRALIA’S short-lived housing price downturn appears to be over, as a modest interest rate cut fuels expectations for those seeking to get on or move up the property ladder.
Property values rose 0.3 per cent across the country in February, bringing prices back near record highs following a 0.4 per cent drop over the previous three months, CoreLogic’s monthly Home Value Index showed last week.
The first weekend of March had the most auctions of 2025 with 2773, more than 4 per cent higher than the same week 12 months earlier.
Even before homebuyers felt the effect of the Reserve Bank’s February rate cut, rising confidence was contributing to a surge in demand, CoreLogic research director Tim Lawless said.
With interest rates still well above historical averages and price-to-income ratios near record highs, Mr Lawless was not expecting prices to pick up again so soon.
“It’s been quite an abrupt change of pace,” he said.
“This is probably a signal that there’s been a boost to confidence, that buyers are probably starting to position themselves in the marketplace (ahead of future growth).”
Ray White chief economist Nerida Conisbee told AAP the buyer’s market which ended 2024 was over.
“It was a really, really short window … once people started to expect a rate cut we did start to see a lot of that excess stock clear and for now it looks like prices will continue to rise,” she said.
A lack of supply and lower interest rates would push buyers to compete further.
“If you give people more money, they’ll put more money into a house, that really is what drives price growth,” Ms Conisbee said.
Markets that had experienced weaker growth in recent times and offered a greater affordability dividend, led the rise in February, with Melbourne and Hobart both firming 0.4 per cent.
“That’s not shooting the lights out, but it’s certainly a big turnaround from a market like Melbourne, where values have been falling over the past 10 months,” Mr Lawless said.
“We were pricing things where we thought they needed to be to get them sold – which was lower than where they had been previously – and we still had to reduce them further to get them moved,” the Harcourts Melbourne principal told AAP.
Despite buoying seller expectations, interest rates may need to drop further for them to find buyers.
“Buyers should be out in full-force right now – we have found the bottom (of the market),’’ Ms Wilson said.
“It will start to go up from here, it’s just a matter of how quickly.”
Mr Lawless said affordability challenges would persist as long as supply remained constrained.
“Regardless of any sort of initiatives aimed at getting more supply into the marketplace, it’s going to be a slow burn,” he said.
