Australian house prices rebound in February, spurred by rate cut
AUSTRALIAN house prices rebounded last month as buyers jumped into the market in anticipation of the first interest-rate cut in more than four years which the Reserve Bank of Australia (RBA) then delivered two weeks ago.
The Home Value Index for major cities advanced 0.3 per cent in February after two months of declines, property consultancy CoreLogic said on Monday (Mar 3). Sydney and Melbourne, the nation’s two largest markets, both recorded gains, as did all other cities except Darwin.
Melbourne’s increase snapped a 10-month run of falling prices.
“Expectations of lower interest rates, which solidified in February, look to be flowing through to improved buyer sentiment,” said Tim Lawless, research director at CoreLogic. “Along with the modest rise in values, we have also seen an improvement in auction clearance rates.”
The rise in prices came as the RBA on Feb 18 lowered rates by a quarter-percentage point to 4.1 per cent, a decision that had been widely expected in the run up to the meeting. Still, governor Michele Bullock cautioned against a rapid follow-up cut, saying policymakers will be closely watching data to ensure a recent cooling in inflation is consolidated.
Australian house price growth had been decelerating since mid-2024 as elevated borrowing costs and extremely high valuations pushed buyers to the sidelines. The RBA eased a bit of that pressure with its rate cut, triggering a rapid response in the property market.
“The return to growth across Sydney and Melbourne is being driven by the more expensive end of the market,” CoreLogic said. That stronger performance “is in line with earlier research from CoreLogic, which highlighted that premium housing markets in Sydney and Melbourne have historically been the most sensitive to rate cuts”.
The report showed national rents rose by 0.6 per cent in February, a relatively strong result but still well below the 0.9 per cent rise recorded a year earlier and the 1.2 per cent gain in February 2021, at the height of the rental boom. BLOOMBERG
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