The RBA's second interest rate cut for 2025 has boosted an already-strong property rebound, causing an uplift in every Australian capital city. 

With buyer demand and consumer sentiment increasing, and a positive inflation picture paving the way for further rate cuts, it's looking like a solid year ahead for sellers. 

Find out what's in store as winter arrives.

Australian property prices: May 2025

The median Australian home rose in value by +0.5 per cent over May according, reaching another record high, according to data from Cotality, previously CoreLogic. 

It was a month in which solid performances were seen across the board in a unified upswing.

Sydney's median price broke through $1.2 million, nearing its previous peak level, while Melbourne's recovery continued, posting a monthly gain of +0.4 per cent. 

Brisbane and Adelaide also had another convincingly positive month, with Perth setting the bar highest for the mid-sized capitals with +0.7 per cent growth. 

It was strong and steady for Hobart and Canberra too, while Darwin's sudden boom followed on into May with a huge gain of +1.6 per cent. 

Regional markets saw consistent growth as well, with the exception of regional Tasmania which has exhibited weakness in 2025. 

Cotality's research director, Tim Lawless, put the widespread uplift squarely down to the RBA's recent interest rate cuts. 

"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," he said.

Three key takeaways from the current market

A number of 2025 property trends have become more firmly entrenched while other shifts are now just emerging. Here are the headline issues worth tracking. 

May's interest rate cut has had an immediate impact

As Mr Lawless explained, the RBA's second rate cut for 2025 — one which was considered all but a certainty for weeks before the May 20th decision — has driven property values higher across the country. 

Cotality data also showed that auction clearance rates picked up in the week following the RBA's announcement, suggesting buyers are taking swift action and capitalising on improved borrowing capacities. 

Westpac analysis confirmed the sudden bump in activity, with senior economist Matthew Hassan saying there are "signs that the firm May gain is not a seasonal mirage. Daily measures show a notable lift in prices following the RBA's May policy decision."

Mr Lawless predicted that the sudden bump in buyer urgency won't be short-lived, either. 

"With interest rates falling again in May, we are likely to see a positive influence flowing through to housing values in June and through the rest of the year," he said. 

Our once-splintered cities are now starting to converge

If you look back at Cotality data from just 9 months ago, you'll see a very different picture of how Australia's various markets were performing. 

In the second half of 2024, Sydney and Melbourne were in a clear slump, Brisbane, Perth and Adelaide were storming ahead at a fierce pace, and the smaller capitals were firmly on a plateau. 

Each market was on its own unique path depending on how factors like affordability, supply levels, and the high interest rate environment were playing out.

But now, with rate cuts providing a boost all around the country, Mr Hassan summarised "the main theme across the capital city detail continues to be of a convergence in trends after several years of widely diverging performances."

Sydney and Melbourne are in a rebound phase at a time when the mid-sized capitals have settled back into more moderate growth, resulting in a more unified movement around the country. 

With rate cuts having a blanket effect nationally, we may see more of this unison in the months to come. 

Rental markets are continuing to ease

It's been a hard few years to be a tenant around Australia, with extremely low vacancy rates and fast-climbing rents becoming the norm. 

While vacancy rates remain troublingly low in many markets, that rapid pace of rent increases has clearly softened, clocking a national +0.4 per cent increase in May. 

Cotality notes that persistently low vacancy rates would be expected to keep pumping rents higher, but affordability pressures have helped to keep a lid on further meteoric growth. 

The report notes that "Even if there are few vacant properties available for rent, it’s hard to see how rental values can continue to record a strong rise off already high prices, especially with wage growth now slowing. 

"Larger households may be forming as a result, such as share homes and multi-generational living arrangements, taking some pressure off demand."

They add that net overseas migration falling back towards more normal levels is also helping to pump the brakes on rental demand.

What's next for Australian property? 

Falling interest rates and a promising outlook for inflation appear to be the key to the second half of 2025 when it comes to property growth. 

The big four banks are all aligned in forecasting two more rate cuts for the year, bringing the cash rate down from its high point of 4.35 per cent prior to February all the way down to 3.35 per cent. 

We've already seen that these rate cuts have a sudden and significant impact on buyer demand, pushing property values up across the country. Any further cuts are expected to have the same effect. 

Consumer confidence post-election and a persistent undersupply of homes are further tailwinds helping to prop prices up in the coming months. 

However, Cotality point out that it's not all upside. Affordability is as stretched as ever, and slowing population growth means demand may not swell as much as it has been in the past two years. 

Both of these factors mean forecasters aren't expecting another all-out property boom despite ongoing rate cuts.

Cotality's report concludes that, "overall, we are still expecting housing values to post a modest rise in 2025, albeit at a slower pace than what was recorded in 2024."