National dwelling values increased by 0.6% in July, mirroring growth levels seen since May, and pushing annual growth to 3.7%.
The median dwelling value Down Under has reached $844,197 as at 31 July.
The sustained upswing comes after the Reserve Bank of Australia's (RBA) interest rate cut in February, which helped reverse the market's earlier stagnation.
While the pace of growth has stabilised in recent months, housing values remain buoyed by record-low listings, steady demand, and renewed buyer confidence.
"At the national level, the pace of growth in housing values is no longer accelerating," said Tim Lawless, Cotality's research director.
"Rather, we have seen growth rates holding a little above half a percent from month to month since May as the opposing influence of low supply, falling interest rates and rising confidence run up against affordability constraints and lingering uncertainty."
Capital Cities Lead the Charge, Darwin Surges
Every capital city posted value gains in July, with Darwin leading the way at 2.2%, followed by Perth (0.9%) and Brisbane and Adelaide (both 0.7%).
Even traditionally slower movers such as Hobart (0.1%), Melbourne (0.4%) and Canberra (0.5%) edged upward.
Notably, Perth has had its fastest monthly growth rate since September 2024.
"The mid-sized capitals are once again standing out, especially Perth," Lawless noted.
The combined capitals index rose 0.6%, while regional markets matched that growth pace.
However, the rolling quarterly growth rate now favours capital cities (1.8%) over regional areas (1.7%), reversing a trend that persisted for most of the past year.
Low Listings and High Demand Sustain Prices
The latest upswing is driven largely by tight supply.
National property listings are tracking 19% below the five-year average, while estimated annual sales are 1.9% above average.
This imbalance has bolstered auction clearance rates, which have hovered above the decade average since mid-May, providing further momentum for price growth.
Houses Outperform Units as Detached Demand Dominates
Houses continued to outperform units in the three months to July, with national house values rising 1.9%, adding roughly $16,700 to the median house price, compared to a 1.4% increase for units (an increase of about $9,700).
The gap between house and unit prices has now reached a record 32.3%, or $223,000, reflecting both buyer preferences and supply issues in the multi-unit sector.
"Such a wide difference comes amid ongoing affordability constraints and a lack of newly built multi-unit housing supply, which seems counterintuitive," said Mr Lawless.
"Clearly, demand preferences are still weighted towards detached housing options despite the substantially lower price points available across the unit sector".
Rents Rise Again, Squeezing Tenants
The national vacancy rate remained near historic lows at 1.7%, with signs of reacceleration in rental growth.
Seasonally adjusted rents rose 1.1% in the three months to July, up from a recent low of 0.5% in late 2024. Unit rents rose faster than houses, up 1.3% over the quarter compared to 1.1% for houses.
Despite the rental growth, gross rental yields fell slightly in July to 3.68% nationally, down from 3.71% in April. Darwin continues to offer the highest gross yields among capitals at 6.4%, thanks to its lower median prices relative to rents.
"The reacceleration in rental growth is clearly bad news for renters, where the median income household would already need around a third of their pre-tax income to pay rent," said Mr Lawless.
Moderate Growth Outlook Amid Mixed Signals
Looking ahead, Cotality expects values to rise modestly through the rest of 2025.
The June quarter inflation result has opened the door to more rate cuts, possibly as early as August.
"Given that core inflation is now firmly around the mid-point of the RBA's target range, there is a clear expectation that interest rates will reduce further from here," Mr Lawless said.
However, housing affordability remains a critical challenge, with the dwelling value-to-income ratio sitting at 7.9, just shy of record highs.
Household debt remains elevated, and regulators, including APRA, have flagged their concerns over potential over-borrowing in a lower-rate environment.
Image by Paul Kapischka on Unsplash
