Housing Market Gains Momentum: July Data Signals Renewed Strength

Australia’s housing market is showing renewed vigour, with national home values rising for the sixth consecutive month in July. CoreLogic’s latest Home Value Index reveals a 0.6% increase in dwelling prices, reinforcing the view that the market has entered a phase of steady, sustainable growth.

Despite persistent affordability concerns and broader economic uncertainty, the property sector appears to have stabilised. July’s gain mirrors the increases seen in May and June, suggesting the recovery is measured rather than speculative.

Capital Cities Lead the Charge

Every capital city recorded a rise in values last month. Darwin posted the strongest growth at 2.2%, followed by Perth (0.9%), Brisbane and Adelaide (0.7% each). Sydney matched the national average, while Melbourne saw a modest but meaningful 0.4% increase—its best result in several months.

Key fundamentals support the uptick: easing interest rate expectations, a chronic shortage of housing stock, and improving buyer sentiment.

Melbourne: A Market Reawakening

While Melbourne’s growth trails other capitals, it marks a turning point for the Victorian market. After a prolonged period of subdued performance, buyer interest is returning—particularly in established suburbs and lifestyle precincts.

With affordability constraints easing slightly and rental demand surging, Melbourne is well-positioned for a stronger finish to 2025. For buyers and investors, the current environment presents a strategic opportunity before competition intensifies.

Supply Shortages Drive Price Pressure

National property listings remain 19% below the five-year average, while transaction volumes are tracking nearly 2% above average. This supply-demand imbalance is keeping auction clearance rates elevated and supporting upward pressure on prices.

Detached houses continue to outperform units, with house values rising 1.9% over the past three months—more than double the 0.9% gain for units. The median house price nationally has increased by $16,700 in that time, compared to $9,700 for units. The price gap between houses and units has now reached a record 32.3%, or approximately $223,000.

In Melbourne, this trend is particularly pronounced, with buyers favouring family homes in well-connected suburbs over high-density apartments.

Regional Markets Lose Ground

For the first time in nearly a year, capital cities have outpaced regional markets in quarterly growth. Combined capital city values rose 1.8% over the past three months, edging out the 1.7% gain in regional areas. The shift reflects a renewed preference for urban living, driven by employment, education, and lifestyle amenities.

Rental Market Tightens Nationwide

Rental conditions remain tight, with vacancy rates holding at a historic low of 1.7%. This is fuelling rental growth, particularly in the unit sector. Nationally, unit rents rose 1.3% over the past three months, while house rents increased by 1.1%.

In Melbourne, rental growth has been more subdued, but this may not last. As migration rebounds and housing supply remains constrained, upward pressure on rents is expected to intensify—enhancing the appeal of property investment in the city.

Outlook: Optimism with Caution

Looking ahead, the outlook for the remainder of 2025 is cautiously optimistic. With inflation easing and interest rate cuts potentially on the horizon, market conditions are expected to remain supportive of further price growth.

While affordability and household debt remain key challenges, the fundamentals—tight supply, strong rental demand, and improving sentiment—are firmly in place.

For Victorian buyers, the current environment offers a compelling case to act. With values still below previous peaks in many suburbs and rental yields set to improve, now may be the ideal time to secure a foothold in the market before momentum builds further.