Melbourne and Hobart led the nation's price growth, reversing recent trends, in February.
Australia's median dwelling value rose 0.3% over the month to $815,912, according to CoreLogic's Home Value Index (HVI).
That growth was outpaced by house prices in Melbourne and Hobart, where dwelling values increased by 0.4% month-on-month, fueled by renewed buyer interest following the RBA's first rate cut in over four years.
"Expectations of lower interest rates, which solidified in February, look to be flowing through to improved buyer sentiment," CoreLogic Research Director Tim Lawless said.
"Along with the modest rise in values, we have also seen an improvement in auction clearance rates, which have risen back to around long-run average levels across the major auction markets."
How did other cities perform?
Property prices in Sydney, Adelaide, and Perth followed closely behind, each recording a 0.3% rise in February.
Meanwhile, Brisbane and Canberra saw 0.2% growth month-on-month.
Darwin was the only capital where prices dipped, falling 0.1% over the month.
| City | Month-on-Month Change | Annual Change | Median House Value | Median Unit Value |
|---|---|---|---|---|
| Sydney | 0.3% | 1.1% | $1,464,132 | $855,538 |
| Melbourne | 0.4% | -3.2% | $916,763 | $604,574 |
| Brisbane | 0.2% | 9.7% | $977,381 | $690,651 |
| Adelaide | 0.3% | 11.9% | $873,029 | $589,134 |
| Perth | 0.3% | 14.3% | $840,400 | $592,417 |
| Hobart | 0.4% | -0.3% | $699,533 | $533,514 |
| Darwin | -0.1% | 1.5% | $588,737 | $359,937 |
| Canberra | 0.2% | -0.9% | $963,146 | $589,329 |
| National | 0.3% | 3.8% | $880,590 | $669,853 |
How the RBA's rate cut is shaping the property market
The RBA lowered the cash rate from 4.35% to 4.10% on 18 February, triggering the first large-scale wave of home loan interest rate cuts in years.
With lower mortgage rates, borrowers can afford larger loan amounts and more easily pass serviceability tests, supporting price growth.
It appears that predictions of a rate cut fueling demand and pushing up home prices are proving accurate.
The typical variable rate on an outstanding home loan stayed in the range of 6.3% p.a. to 6.4% p.a. between November 2023 - the last RBA rate hike - and December 2024.
Assuming typical variable rates fall 25 basis points to 5.95% p.a., a borrower with a $600,000, 30-year mortgage could find themselves saving more than $135 per month.
See also: Mortgage Repayment Calculator
Meanwhile, a homebuyer with an income of $100,000 might find their borrowing power boosted by close to $20,000, allowing them to spend more on their property purchase.
However, further momentum may be limited.
"Until home loan serviceability improves more substantially, it's hard to see housing markets moving into a material growth trend," Mr. Lawless said.
Other factors that could drive price growth include an uptick in consumer sentiment and low levels of housing construction, while slower population growth may weigh on values.
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| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.79% p.a. | 5.83% p.a. | $2,931 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.84% p.a. | 5.86% p.a. | $2,947 | Principal & Interest | Variable | $0 | $250 | 60% |
| Promoted | Disclosure | ||||||||||
5.74% p.a. | 5.65% p.a. | $2,915 | Principal & Interest | Variable | $0 | $0 | 80% | 100% owned by Commbank |
| Disclosure |
Image by David Billings on Unsplash
Collections: Property News Mortgage News
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