Falling interest rates have gently revived Australia’s housing market, yet aspiring buyers still face stern affordability tests. Cotality’s June Home Value Index shows national dwelling values crept 0.6 per cent higher in the month and 1.4 per cent across the quarter.
Two Reserve Bank cuts, in February and May, underpinned the shift; futures markets now tip the cash rate to fall towards 3.1 per cent by Christmas.
The current rebound remains measured. Annual growth sits at 3.4 per cent and the median national price is $837,586. For homeowners, that points to steady equity repair rather than a boom. For first-home hopefuls, deposit targets are rising less brutally than in 2021-22, though still faster than wages.
Shortage of homes for sale underpins prices
Supply rather than surging demand is doing most of the work. Advertised listings sit almost six per cent below a year ago and 17 per cent below the five-year average. Sales turnover, at an annualised 4.9 per cent of total housing stock, is also marginally under the long-term norm. Auction clearance rates rest just above their decade mean.
Regional markets have led the recovery, but momentum is tilting back to the capitals. Regionals still edge ahead on the quarterly ladder – 1.6 per cent versus 1.4 per cent – yet capitals topped the past two months. Darwin heads the quarterly table with a 4.9 per cent jump, while Perth and Brisbane logged gains around two per cent. Melbourne remains the laggard, down 0.4 per cent over the year. Meanwhile, regional hot spots bear watching.
Affordability still the greatest challenge
Affordability is still the market’s chief speed-limiter. The 2.4 per cent lift in national values during the first half added roughly $19,000 to the price of the median dwelling, offsetting much of the borrowing-capacity boost from cheaper credit. Household debt equals 181 per cent of disposable income, and only six per cent of new loans now exceed a debt-to-income ratio of six.
Renters have seen some relief. National rents rose 1.3 per cent in the June quarter, the slowest second-quarter increase since 2020, as households already devote about one-third of pre-tax income to rent. Slower rental inflation could help prospective buyers accumulate deposits, though vacancy rates near one per cent suggest competition for leases will stay keen.
Looking ahead, analysts expect modest price growth to continue while interest rates drift lower and jobs remain plentiful. Yet easing net migration, tight lending standards and fragile consumer confidence should cap the pace.
For homeowners, that combination hints at orderly capital gains instead of sharp spikes. First-home buyers may welcome the calmer environment, but disciplined budgeting, early finance pre-approval and a readiness to compromise on suburb or property type will still be critical.
If you’re in need of property advice, find your nearest First National Real Estate member at www.firstnational.com.au
Monthly change in capital city home values
