August 2025
Australia’s housing market managed to rack up its sixth consecutive month of price gains in July, despite the Reserve Bank of Australia (RBA) shock decision to put a pause on rate cuts.
Further reductions to interest rates are viewed as inevitable, however, and are set to drive a rise in dwelling values, given ongoing failure to expand housing supply despite the federal government’s ambitious targets.
Home price growth maintains momentum in July
National dwelling values posted a 0.6 percent rise in July, bringing the current cycle of price gains to its sixth consecutive month, according to figures from Cotality.
Price movements for the Australian housing market first turned a corner in February, when the Reserve Bank of Australia (RBA) kicked off its current cycle of interest rate cuts.
The RBA’s shock decision to hold off on a rate cut in July didn’t put a dent in the steady momentum of home price gains. The rate of nationwide price growth in July was on par with gains for the preceding two months, with all of Australia’s capital cities posting increases.
Darwin led the pack with an on-month rise of 2.2 percent, while Hobart came in last, with housing prices in the Tasmanian capital edging higher by just 0.1 percent.
Sydney saw its dwelling values rise 0.6 percent, while in Melbourne they rose 0.4%.
Tim Lawless, Cotality’s research director, said nationwide home price growth received a boost from a combination of low supply and declining interest rates, which help to drive a rise in confidence. This helped to overcome the headwinds of affordability constraints and ongoing uncertainty.
Lack of supply is evidenced by the fact that national listings are tracking -19% beneath the previous five-year average for this time of year.
Demand is comparatively robust, however, with Cotality estimating that annual sales are tracking around 1.9% above the previous five-year average.
August rate cut
The Reserve Bank’s decision to cut the cash rate by 25 basis points to 3.60 percent will add further momentum to housing demand already underpinned by low supply. While cheaper borrowing will improve project feasibility for developers — particularly SMEs — the benefits risk being offset by rising land prices, labour shortages and slow approvals. Without addressing these supply-side constraints, the uplift in demand from lower rates may simply put more upward pressure on prices rather than delivering the volume of new homes needed.
While welcoming the latest rate cut, CrowdProperty CEO David Ingram said the interest rate was only part of the solution to more home construction.
“Our latest SME developer survey shows that rising land costs have now overtaken finance as the number one barrier for small-scale developers,” Ingram said.
“62.5 percent of respondents ranked it in their top three challenges, nearly double the proportion from two years ago. With listings almost 20 percent below average, these cost pressures are choking the supply of the very infill housing our cities urgently need,” he said.
“The RBA’s August rate cut will help on the finance side, but it’s only part of the solution. Cheaper money doesn’t make land any less expensive or approvals any faster. We need targeted policy and funding measures that enable SME developers to compete for sites and bring projects to market more quickly.
“SME developers are the backbone of Australia’s infill housing supply. They’re agile, able to deliver in well-located areas, and they can scale up quickly if given access to affordable sites, planning certainty, and fit-for-purpose finance. Without unblocking these constraints, even a supportive interest rate environment will leave us short of housing targets.”
Leading economists point out that supply growth continues to disappoint, despite the National Housing accord target of building 1.2 million new well-located homes by the end of the decade.
HIA senior economist Tom Devitt highlights the gap between the demand about to come online as a result of rate cuts and the laggard condition of building starts.
“Interest rate cuts from the Reserve Bank in February and May this year, and now August, will help bring more potential homebuyers back to the market in the lagging – and often more expensive – states and territories,” Devitt said.
“Even with lower interest rates, Australia is set to start just 200,000 homes per year, on average, over the next four years.”
“Multi-unit activity, in particular, needs to do more heavy lifting. Multi-unit commencements need to double from current levels in order to achieve the government’s housing targets.”
John Lindeman, CEO, Property Power Partners, highlights the role of inflation and insufficient labour supply in holding back efforts to expand housing volume.
“The key issue is that we are simply not building enough new homes,” Lindeman said.
“Australia needs around 270,000 new dwellings a year to meet population demand.”
“Treasury has revealed, however, that construction costs, tradie shortages and the complexity of development approval processes mean that the Federal Government will not meet its (already inadequate) Housing Accord target of 240,000 annual completions without a substantial lift in funding.”
“Similar to other government initiated housing schemes, this is increasingly looking like another window dressing stunt.”
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Opinions or views expressed represent the thoughts of individuals and not those of CrowdProperty or Cache.
July 2025
Australia’s home values saw accelerated gains in the second quarter on the back of long-awaited interest rate cuts. Property observers foresee further gains in home prices driven by further RBA rate cuts, as well as housing support policies put in place at both national and local levels.
Home value growth gathers momentum
The Australian housing market extended its streak of price gains to a fifth consecutive month in June. Dwelling values lifted 0.6 per cent according to figures from Cotality, with monthly increases posted across every region of Australia, except Hobart which saw a 0.2% decline.
National home values rose 1.4% in the June quarter (Q2 2025), accelerating from a 0.9% increase in Q1 2025. This follows a 0.1% decline in Q4 2024.
PropTrack data indicates that national house prices hit a record high before the close of the last financial year, and are now on average $40,900 higher than they were a year previously, in a major affordability blow for first-time home buyers.
The two rate cuts posted by the Reserve Bank of Australia (RBA) in the first half of 2025 played a pivotal role in the recovery then acceleration of growth in nationwide housing prices.
Cotality’s research director, Tim Lawless, says the long-awaited moves from the RBA and its pivot towards a dovish monetary policy stance are an inflexion point for the performance of Australia’s housing market.
“The first rate cut in February was a clear turning point for housing value trends. An additional cut in May, and growing certainty of more cuts later in the year have further fuelled positive housing sentiment, pushing values higher,” Lawless said.
Lawless also pointed to low levels of advertised stock, tracking -5.8 percent below the same time a year ago.
More RBA cuts anticipated
Economists foresee further cuts from the RBA, as Australia grapples with the market uncertainty created by Trump’s mercurial tariff war and strife in the Middle East.
AMP chief economist Shane Oliver expects the RBA to cut interest rates by 25 basis points in July, August and November of this year, before cutting again in February 2026. The move will drag the cash rate down to 2.85 per cent, providing a boost to home prices.
REA senior economist Eleanor Creagh shares Oliver’s opinion, pointing to building market momentum as buyers anticipate another rate cut in July. Despite worsening affordability, Creagh expects further interest rate cuts in 2025 to provide further support to ongoing price growth with lower borrowing costs.
Rise in buyer demand to drive price growth
John Lindeman, CEO, Property Power Partners told CrowdProperty that these interest rate cuts in tandem with secular growth in demand and local support policies are on track to boost home values around Australia.
“The recent and further expected interest rate falls plus the Federal Government’s first home buyer initiatives are now combining with state government stamp duty concessions for first home buyers to increase the number of property buyers, as well as the amounts they can borrow,” Lindeman said.
“However, recent upticks in buyer demand are largely an expression of confidence, rather than the actual effects of interest rate cuts and government initiatives – although this will change in coming months.”
Rob Flux, educator and developer at the Property Developer Network, also foresees a mounting market recovery on the back of rate cuts and the government’s homebuyer support initiatives.
“We’re starting to see the market pick up all the way around the country, with interest rates dropping and early signs of more rate drops to come,” Flux said.
“With the federal government stipulating the five percent deposit for first home owners and other states giving home owner grants, we’re going to see more activity in terms of buyers coming back to the market.”
Lindeman sees variable trends in prices depending on the types of buyers attracted to different market locations.
“First home buyer markets will experience the biggest lift in demand, and prices are expected to rise in many of the lowest priced suburbs in our major cities,” he said.
“There will also be an increase in buyer demand for upgrader suburbs, but much of this will occur as recent first home buyers decide to upgrade, so the effect on prices will be less and take longer.”
Limited supply of new affordable apartments
The current limited supply of affordable housing in the market is significantly distorting pricing trends. Recent data from Ray White reveals a striking shift: units are now outperforming houses in Adelaide, Perth, and Brisbane, largely due to chronic undersupply.
Developers have increasingly focused on luxury projects aimed at downsizers, driven by rising land and construction costs. Unfortunately, this trend creates a cycle where affordable housing options dwindle, leading to heightened competition for the few existing units driving prices up.
At CrowdProperty, we recognise the urgency of this situation. We are dedicated to supporting developers in building more homes to help address this supply crisis. As David Ingram, CEO of CrowdProperty, emphasises, tackling this issue is essential for sustainable growth in the market.
CrowdProperty provides fast, simple and transparent property project finance for property professionals, learn more.
Opinions or views expressed represent the thoughts of individuals and not those of CrowdProperty or Cache.
June 2025
Home prices continued to rise around Australia in May, with all of the capital cities seeing gains.
Australia continues to fall short of housing development targets, which is set to provide a further boost to dwelling values over the medium and long-term.
Home values maintain growth momentum
Home values in Australia posted a 0.5% rise in May, bringing growth in Cotality’s National Index to 1.7% for the first five months of 2025.
Tim Lawless, Cotality research director, said that the Reserve Bank of Australia’s (RBA) rate cut helped to sustain the momentum in dwelling price gains around almost all of Australia.
All of the nation’s capital cities saw increases in home values of at least 0.4% last month.
Lawless said expectations of further rate cuts from the RBA will help to buoy Australian home prices until the end of 2025.
“With interest rates falling again in May, we are likely to see a further positive influence flowing through to housing values in June and through the rest of the year.”
Trump’s tariffs create cost uncertainty
While inflation in Australia has eased to within the RBA’s target range, its future course remains uncertain as a result of the turmoil caused by the Trump administration’s so-called ‘Liberation Day’ tariffs.
The tariffs could have an ambivalent impact on construction costs in Australia. While they could push costs higher by disrupting supply chains, they could also increase supply by impeding China’s exports to the huge US market, forcing manufacturers to search for alternatives.
AltusGroup reports that material prices already offer a mixed outlook. Steel and copper prices have trended lower, although energy-intensive materials such as brick and concrete remain expensive.
In the first quarter of 2025, prices for building materials used in residential construction recorded the first quarterly price decrease since the March 2012 quarter, driven by tepid demand in the eastern state of NSW and Victoria.
AltusGroup’s report also highlights Australia’s scarce supply of skilled construction labour as another important cost factor, given the upward pressure it’s putting on wages.
Dip in housing approvals led by NSW and Victoria
Australia appears to be lagging further behind national cabinet’s ambitious goals for the creation of 1.2 million well-located homes by the middle of 2029.
ABS data points to a drop in approvals across Australia of -5.7%. Declines were led by the two most populous states of NSW (-7.8%) and Victoria (-6.5%).
This leaves approvals well beneath the housing accord targets despite an overall upward trend.
Tom Forrest, CEO of Urban Taskforce Australia, said the data should come as a wake up call for the recently re-elected Albanese government.
“While there is clear improvement with 182,000 new homes approved in the last 12 months, that remains a long way behind the completion of 240,000 homes in every 12 month period of the Housing According,” Forrest said in an official statement.
“There is much more to be done on housing supply before the housing crisis is eased.”
Interest rates trending down could stimulate development activity
CrowdProperty head of operations Lisa Digby said the trend of declining interest rates is expected to stimulate increased activity in the housing market.
“With borrowing becoming more affordable, we anticipate a rise in lending approvals, whether from first-time buyers, investors, or those looking to upgrade,” Digby said.
“This uptick in demand bodes well for developers, particularly when that translates to increased market transactions.”
A lower interest rate environment will also likely see project feasibilities improve. While many developers have been cautious — sitting on the sidelines due to economic uncertainties and the elevated costs associated — there’s still a clear shift towards smaller-scale developments.
“We’re seeing small to medium projects in detached and attached housing and land subdivisions gaining momentum,” Digby said.
“Our increase in recent application volumes supports this trend, showcasing a diverse mix of projects across capital cities and regional centres.”
With the post-election period now behind us, property players are moving forward — acquiring sites, securing finance, and pushing ahead with construction. Overall, the landscape is turning more positive, signaling renewed confidence.
Inadequate supply good news for developers
John Lindeman, CEO, Property Power Partners, points out that even if the National Housing Accord’s target were met, it would still be insufficient to satisfy Australia’s mounting demand for housing.
Australia falling short of the target means the supply-demand imbalance on the housing market will be even more out-of-whack in future.
“The actual rate of completions is falling, and PropTrack forecasts that this trend will continue,” Lindeman said.
“Based on these trends, we will only be meeting around half of the demand for housing expected from population growth over the next five years.”
While this is bad news for home affordability, it’s likely to be a boon for developers who can reap higher home prices — especially amidst a cycle of interest rate cuts.
“As interest rates continue to fall, buyer demand from both investors and owner-occupiers is certain to dramatically increase, especially in the inner suburban areas of our major cities,” Lindeman said.
“This is good news for developers, as more buyers compete for fewer properties, pushing up prices.”
CrowdProperty provides fast, simple and transparent property project finance for property professionals, learn more.
Opinions or views expressed represent the thoughts of individuals and not those of CrowdProperty or Cache.
