The Australian housing market has started 2025 with mixed results, showing resilience despite economic pressures. According to the CoreLogic Housing Market Update, national home values increased by 4.3% over the past year, but trends vary widely across capital cities and regional markets.
Understanding these multi-speed market conditions is crucial for home buyers, investors, and refinancers looking to make informed financial decisions. In this report, we’ll break down the key findings, what’s driving these changes, and what to expect moving forward.
1. Housing Market Growth: Not One Size Fits All
While Australian home values rose 4.3% annually, growth rates differ significantly between states and regions:
- Sydney: +3.8%
- Melbourne: -2.0%
- Brisbane: +5.8%
- Adelaide: +1.8%
- Perth: +1.0%
- Hobart: -0.8%
- Darwin: +1.7%
- Canberra: -0.5%
Regional markets also recorded varying performances, with Regional NSW, QLD, and WA showing the strongest gains, while Regional VIC and TAS experienced slight declines.
The pandemic created sharp housing market imbalances, affecting migration patterns, local economies, and housing supply. As affordability becomes a pressing issue, buyers are shifting their focus, leading to a see-saw effect in pricing.
2. House Prices vs. Unit Prices: The Widening Gap
One of the standout trends from the CoreLogic report is the growing disparity between house and unit values.
- Sydney: Houses are 71.8% more expensive than units.
- Melbourne: Houses cost 52.2% more than units.
- Brisbane: The gap sits at 42.6%.
This divergence is driven by strong demand for houses, especially in lifestyle-rich areas, while unit values have struggled due to oversupply and lower investor demand. If affordability constraints continue, apartments may become a more attractive option for first-home buyers and investors.
3. Melbourne’s Surprising Shift: The Third Cheapest Capital
A significant finding from the report is that Melbourne now has the third-lowest median dwelling value among Australian capital cities, sitting only above Hobart and Darwin:
- Sydney: $1,193,228
- Melbourne: $772,317
- Brisbane: $893,592
- Adelaide: $819,363
- Perth: $809,870
- Hobart: $658,180
- Darwin: $502,632
- Canberra: $850,534
The shift in Melbourne’s ranking reflects its slower market recovery, affordability challenges, and differences in interstate migration trends compared to other cities like Brisbane and Perth.
4. Supply vs. Demand: More Listings, Fewer Buyers
Another key factor shaping market conditions is housing supply. The number of new listings has outpaced the five-year average in 2023 and 2024, meaning there are more properties for sale than buyers available. This is particularly evident in Victoria, where stock levels remain high.
However, advertised inventory levels are still relatively low in markets with strongest capital growth (e.g., Perth, Brisbane, and Adelaide), maintaining competition among buyers in those regions.
5. Interest Rates, Inflation, and Affordability
Interest rates have been a dominant force in shaping market trends. Since May 2022, the RBA has increased rates by 425 basis points, making it the most aggressive rate-hike cycle on record. However, CoreLogic suggests that rate cuts could be on the horizon, potentially unlocking more buyer activity.
At the same time, core inflation has started to trend lower, falling back into the RBA’s target range of 2-3%. The easing of housing inflation—thanks to energy rebates, slowing rent growth, and reduced new home costs—could also provide relief for borrowers.
6. Borrowing Power: Will Lending Get Easier?
The value of home lending increased by 18.9% in the past year, with investor lending jumping 29.5%, more than double the 13.1% growth in owner-occupier lending.
However, borrowing conditions remain challenging, with affordability constraints making it difficult for many to secure finance. The average loan-to-value ratio (LVR) for new mortgages has declined, meaning borrowers are having to save larger deposits.
As interest rates stabilize or decline, we may see an increase in borrowing capacity, particularly for first-home buyers and upgraders.
7. The Rental Market: Cooling Off?
After years of tight rental conditions, CoreLogic’s latest data suggests that rental growth is slowing. This is partly due to higher rental supply, easing demand, and the increasing number of tenants transitioning into home ownership.
That said, rental affordability remains a national challenge, especially in major cities where demand continues to outstrip supply.
8. What This Means for Buyers, Sellers, and Investors
For Home Buyers:
- Affordability remains a challenge, but with more properties available, buyers may have more negotiating power.
- Consider looking at units and apartments, as their price gap compared to houses continues to widen.
- Keep an eye on interest rate movements, as potential cuts could increase borrowing power.
For Homeowners Looking to Sell:
- Be strategic with pricing, as buyer demand is softening in some areas.
- Consider staging and presenting your property to stand out in a competitive market.
For Property Investors:
- Rental growth is slowing, so be prepared for longer vacancy periods in some markets.
- Units may present good value, especially in high-demand locations.
- Keep an eye on lending policy changes, which could impact investment strategies.
Final Thoughts: Navigating the Housing Market in 2025
The Australian housing market is undergoing a shift, with affordability constraints, supply imbalances, and economic factors shaping its trajectory. Sydney and Melbourne are showing signs of slowing growth, while Brisbane, Adelaide, and Perth continue to perform strongly.
For those looking to buy, sell, or refinance, staying informed and working with an experienced mortgage broker can help you make the most of the opportunities ahead.
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