In May, Australian dwelling values experienced a further increase of 0.5%, elevating the national index by 1.7% over the initial five months of the year. This growth was widespread, with each capital city recording a minimum rise of 0.4% throughout the month.

“The continued momentum we’re seeing across almost all markets is no doubt being fuelled by rate cuts – both those that have already happened, but also potential cuts in the coming months,” said Tim Lawless.

The increase in values follows a brief and modest decline of merely 0.4% over the three months concluding in January 2025, with the February rate cut playing a pivotal role in bolstering the upward trend in housing values.

“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.”

Although there is some momentum evident in the monthly trend, the annual growth rate of the national HVI decelerated to 3.3%, marking the most gradual twelve-month change since the period concluding in August 2023.

“This slower annual pace of growth reflects the easing in capital gains through the second half of last year, culminating in the modest fall in values over the three months to January 2025.”

Melbourne (-1.2%) and Canberra (-0.7%) are the only capital cities to have experienced an annual decline in dwelling values, underscoring the market's resilience amidst a backdrop of elevated interest rates and cost of living challenges.

Concurrently, the broad-based increase in home values has led to a notable convergence in capital city trends. The disparity between the highest and lowest annual change in dwelling values, at 9.8 percentage points, is the narrowest observed since March 2021. This convergence is attributed to a deceleration in value growth across mid-sized capitals, while previously subdued markets such as Melbourne and the ACT are returning to growth, thereby reducing the rate of annual decline.

The annual growth range reached its zenith in August last year, with a 26.1 percentage point difference between the highest (Perth at +24.5%) and lowest (Hobart at -1.6%) growth rates, highlighting the most varied growth conditions since 2007. The increase in housing values continues to be driven by lower price tiers across most cities; however, there is also convergence in this segment as higher-priced market segments begin to gain momentum following rate cuts.

In the state capitals, Sydney and Canberra are the only cities where the upper quartile exhibits a stronger quarterly growth trend than the lower quartile, while in most other capitals, the upper quartile is closing the growth rate gap with the lower quartile and the broad middle of the market. Regional markets are also displaying a positive trajectory, with all 'rest of state' markets reporting a rise in values year-to-date.

The most significant gains have been observed in Regional South Australia, where values have increased by 5.8% over the first five months of 2025. Conversely, regional Tasmanian values have remained relatively stable over the same period, with a modest increase of just 0.1%.