In February 2025, Australia’s housing market displayed signs of modest recovery, with the CoreLogic Home Value Index reporting a 0.3% rise nationally. Although this increase marks a reversal from the recent downturn, the improvement has been gradual and measured. This development is particularly significant for homeowners and first homebuyers alike, as it reflects improved market sentiment rather thana sudden surge in property values
Key capital cities such as Melbourne and Hobart have led the rebound, each registering a 0.4% monthly increase after a period of decline. In Melbourne, the market is emerging from a prolonged slump, while Hobart’s resurgence offers hope to those who have experienced recent challenges. However, in cities like Sydney and in many regional areas, the recovery remains more subdued. Prospective buyers are advised to note that modest price gains do not necessarily translate into enhanced affordability.
One key driver behind the current market improvement is the anticipation of lower interest rates. Expectations of rate cuts have bolstered consumer sentiment and contributed to a market environment where auction clearance rates are returning to long-run averages. Nonetheless, experts caution that improved sentiment does not automatically result in greater borrowing capacity. For potential buyers, this means that while conditions are gradually improving, securing favourable mortgage terms remains paramount.
Regional markets, which have often outperformed major cities, experienced a 0.4% monthly increase. These areas benefit from a combination of limited new listings and relatively better affordability compared to the larger urban centres. Despite these gains, many potential buyers still face significant challenges due to constrained supply and broader economic pressures. This modest recovery should be seen in the context of ongoing affordability concerns that affect households across the country.
In addition, the rental market is undergoing a subtle transformation. Rents increased by 0.6% in February, marking the strongest monthly gain since last May, yet this growth remains below previous peaks observed during earlier rental booms. Coupled with moderating migration trends and shifting household sizes, this slowdown in rental growth suggests that both buyers and tenants must adjust their expectations in an evolving economic landscape.
For homeowners and first home buyers, the current market conditions present opportunity and caution. While the modest rebound offers aglimmer of hope, the prevailing challenges of affordability persist. In a climate where improved sentiment is not yet matched by significant increases in borrowing capacity, prospective buyers must prioritise financial planning. A measured approach to property investment is advisable, ensuring buying is based on long-term stability rather than short-term fluctuations.
Australia’s housing market shows early signs of recovery, though the situation remains complex. Market improvements have been modest and are driven more by shifting sentiment than by dramatic changes in affordability. For many, the journey to homeownership continues to be challenging. It is essential for buyers to stay informed, exercise financial discipline, and seek professional advice to navigate this dynamic environment effectively.
Monthly change in capital city home values
