Rate cut and hopes of more lift Australia home prices to record high in May

Reuters

Sun, Jun 1, 2025, 4:22 PM 2 min read

SYDNEY (Reuters) -Australia's house prices rose for a fourth straight month to hit a record high in May as another interest rate cut fuelled expectations of more to come, with every state capital posting a rise in prices.

Figures from Cotality, formerly CoreLogic, showed national prices rose 0.5% in May from April to hit a peak price of A$831,288 ($536,015). That compared with a 0.3% gain the previous month and brought the annual growth to 3.3%.

Prices in Darwin jumped 1.6%, followed by a 0.7% rise in Perth and a 0.6% increase in Brisbane. Prices in Sydney and Melbourne also gained.

"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," Cotality Research Director Tim Lawless said.

Those cuts could boost sentiment in June and through the rest of the year with home prices expected to post "a modest rise" this year, though at slower pace recorded in 2024, Lawless said.

The Reserve Bank of Australia cut interest rates to a two-year low last month, the second such move in the current easing cycle following a cut in February. It also left the door open to more policy easing as cooling inflation at home offered scope to counter global trade risks.

Swaps imply a total easing of 85 basis points by mid next year - about three or four more rate cuts.

Strong immigration and tight supply has helped Australia's property market to end a year-long slide much earlier than the expectations of many experts.

"Some renewed confidence in decision making after the federal election and an ongoing undersupply of newly built homes are other factors that are likely to support further price growth," noted Cotality.

($1 = 1.5509 Australian dollars)

(Reporting by Renju Jose and Stella Qiu in Sydney; Editing by Lincoln Feast.)