Home prices rise across all capital cities in July, as Cotality index lifts for sixth month

Australia Broadcast Center

31-07-2025

Australian property prices have scaled new record highs as demand for housing offsets buyer concerns about the Reserve Bank's shock call to hold interest rates steady.
National dwelling values rose 0.6 per cent last month, marking the sixth consecutive monthly increase, according to figures from property research firm Cotality (formerly CoreLogic).
The median home value is now $844,000, an increase of 3.7 per cent in a year.
"That [growth] started with the cash rate being reduced in February," said Eliza Owen, head of research at Cotality.
"Overall, it's taken home values about 3 per cent higher through the year to date, or the equivalent of another $25,000 being added to the median dwelling value in Australia.
"And we're seeing these gains right across the country now."
All capital cities saw price growth in July, with Darwin recording the biggest monthly increase at 2.2 per cent.
Darwin is Australia's most affordable capital city.
"When it comes to the Darwin market, it's a low price point," Ms Owen said.
"But it's also got pretty strong gross rent yields so no doubt, investors are seeing a bit of an opportunity there not just for short term capital growth but for decent rent return."
House values (+1.9 per cent) once again outpaced gains in units (+1.4 per cent). Notably, the difference between the national median house and unit value has hit a record high of 32.3 per cent, or around $223,000.
Capital cities (+1.8 per cent) were also outperforming regional markets (+1.7 per cent), after nine months of the quarterly trend rate of growth favouring country areas.
The rise in property prices comes despite the RBA's decision in early July to hold the cash rate at 3.85 per cent.
However, with inflation continuing to slow, a rate cut is now widely expected when the RBA's board meets on August 12.
History shows that when interest rates go down, house prices go up. The exceptions to that rule were during the recession of the late 1980s and early 1990s, and around the time of the global financial crisis, said AMP chief economist Shane Oliver.
"When interest rates go down, it enables people to borrow more when they show up at the bank," Mr Oliver said.
"Basically, for somewhat an average earnings, and a 20 per cent deposit, you can borrow about $9,000 to $10,000 extra from a 0.25 per cent interest rate cut."
The correlation between rate cuts and house price growth was something Melbourne real estate agent Matthew John was attuned to.
Mr John said optimism about future rate cuts had already started to flow through to the amount buyers were willing to pay.
"Even perceived rate cuts are helping people understand that the market's probably heading in an upwards trajectory in terms of pricing," Mr John told ABC News.
The agent said increased optimism on top of a seasonal mismatch between supply and demand, particularly for higher quality properties, was resulting in more of a "seller's market."
"We're starting to see more bidders at auction, more offers happening prior to auctions as well for people trying to jump on something, especially buyers that have missed out on other properties," Mr John said.
Data from REA Group's PropTrack also demonstrates the strength of the housing market, with national values up 0.3 per cent in July. Adelaide led the monthly gains (+0.9 per cent), followed by Hobart (+0.5 per cent), Brisbane (+0.4 per cent), and Perth (+0.4 per cent).
However, in contrast to Cotality's monthly data, REA Group's data showed monthly and annual declines in Canberra values of 0.1 per cent.
Any benefits from increased property values favour those already in the market.
"To have house prices taking off again is not great for first home buyers," Mr Oliver told ABC News.
"Prices to average earnings is more than double what it was 20 years ago.
"And so yeah, you've got lower interest rates and that's good news.
"But, by the same token, you've got to pay a lot more to get a home compared to the situation in the past."
Mr Oliver said the Australian property market could be reaching its price peak.
"I would think we're getting close to that now," he said.
That was because, as Mr Oliver explained, the amount of money a first home buyer could borrow was now way below what they would need to get into the property market.
"At the moment, they're relying on the Bank of Mum and Dad, but there's a limit to that. And of course, it's also grossly unfair.
"Ultimately, there is a limit to this, but it's unclear as to when we're going to hit that limit."
Ms Owen agreed that affordability would at least slow the pace of price growth, even with further rate cuts.
"Even though we're continuing to see price growth, it's a little bit more subdued now compared to what we saw at the onset of COVID, because even though interest rates are falling, they're at a much higher setting," Ms Owen said.
"Affordability is probably the biggest headwind to growth being any stronger than what it's sort of running at at the moment."
But in bad news for those in the rental market, Cotality's latest data also showed that rents had accelerated.
National rents rose 1.1 per cent in the three months to July, up from a recent low of 0.5 per cent in the September quarter last year.
Indeed, rents went up in all capital cities. The Darwin unit market recorded the fastest rate of quarterly growth, up 2.9 per cent, followed by Darwin houses at 2.2 per cent and Hobart houses at 2 per cent.
Ms Owen said a shortage of available rentals, combined with income growth, was pushing up rents in some markets.
"We're starting to see a bit of income growth that's putting particular pressure on high-end rental markets, as cities like Sydney, for example, essentially, supply levels remain very tight in the rental market, but income growth means you've got a little bit more demand there as well."