Australian house prices hit new record amid interest rate cuts

Australian property prices have scaled to a new record high, as a lack of stock and interest rate cuts continue to spur on buyers.

National dwelling values rose 0.5 per cent in August for the eighth consecutive monthly increase, according to Proptrack.

National house prices are now at $835,000, up 5.3 per cent for the last 12 months.

In other words, house prices are now $47,900 higher compared with this time last year.

“This marks eight straight months of growth as the housing market gains momentum following the series of interest rate cuts this year which have boosted borrowing capacities, improved sentiment and drawn buyers back into the market,” Rea group senior economist Eleanor Creagh said.

“As a result, the housing upswing, once narrowly led by a handful of cities, is broadening.”

Prices in seven of the eight capital cities, led by Darwin (0.8 per cent) and Sydney (0.7 per cent), were higher.

Prices in Melbourne were up 0.3 per cent in August and are now just 0.6 per cent below the city’s previous 2022 peaks.

Hobart was the only capital city to fall, down 0.5 per cent over the month of August.

“Demand has re‑accelerated in Sydney and Melbourne, marking a turnaround from the slower conditions observed in late 2024,” Ms Creagh said.

“Darwin has swung from inertia in 2024 to leading annual growth among the capitals.”

House prices in Brisbane and Perth gained 0.6 per cent each, while Adelaide is up 0.3 per cent.

Regional house prices finished 0.3 per cent higher in August and are now up 6.6 per cent year-on-year, continuing to outpace the capitals over the last five years.

The rise in house prices follows the Reserve Bank of Australia cutting interest rates by 25 basis points to 3.60 per cent following its August 11-12 board meeting.

This was the third interest rate cut of the cycle, following 25 basis point rate reductions in February and May.

“We only expect three more rate cuts in this cycle, taking the cash rate to a low of around 2.85 per cent next year and mortgage rates to around 5 per cent,” AMP chief economist Shane Oliver said.

Ms Creagh said the market was likely to continue its gain over the busy spring selling season.

“Looking ahead, the combination of lower interest rates, increased borrowing capacities and improved sentiment is expected to continue to drive demand,” she said.

“Constrained new housing supply, strong population growth and the expansion of the Home Guarantee Scheme from October will also maintain upward pressure on prices.”