▲ Sydney Real Estate Market: High-End Sector Leading the Recovery
Sydney’s property market is exhibiting strong recovery momentum, with house prices expected to reach new highs. Interest rate cuts have played a crucial role in stimulating demand for properties in high-priced areas. Compared to the peak in September 2024, Sydney’s overall property prices have declined by 1.6%, but regional differences are significant. High-end areas such as the Northern Beaches saw steeper declines, whereas the southwestern suburbs recorded double-digit growth. CoreLogic’s Head of Research, Tim
Lawless, predicts that by 2025, Sydney’s high-end suburbs will be the first to experience a full recovery. In February, Sydney’s median house price rose by 0.3% to AUD 1.464 million, marking the first increase since September last year. The expectation of further interest rate cuts has significantly boosted buyer confidence, fueling the rebound in the high-end property market.
▲ Real Estate Markets in Other Cities: Increasing Divergence
- Cities with Slower Growth
Perth and Adelaide, which previously led Australia’s property market, saw noticeable slowdowns in price growth in February. Perth’s property prices reached a record high of AUD 840,400 but increased by only 0.2%, with the annual growth rate falling to 13.9%. Adelaide’s prices rose by 0.3% to AUD 873,029, with annual growth slowing to 11.5%. Brisbane’s median house price remained at AUD 977,381, with the annual growth rate declining to 8.6%. - Cities Benefiting from Recovery
Melbourne and Hobart benefited the most from the Reserve Bank of Australia’s (RBA) first interest rate cut since November 2020, recording the largest price increases in February. Hobart, which had been struggling with a cost-of-living crisis, saw prices drop by 11.9% from the March 2022 peak but experienced a slight rebound last month, rising by 0.6% to AUD 699,533. Melbourne’s house prices remain 6.4% below their peak, but February saw a 0.4% increase to AUD 916,763. Lawless predicts that by 2025, high-end residential areas in Melbourne and Sydney will see the most substantial growth. The Commonwealth Bank and Westpac forecast three more rate cuts before Christmas, with Sydney and Melbourne’s recovery mainly driven by the high-end property market. - Outer Suburbs: The Rise of Affordable Areas
Over the past year, house prices in more affordable outer suburbs have performed exceptionally well. For example:
- Perth’s Swan district saw a 20% increase, reaching AUD 759,869.
- Adelaide’s Playford district rose by 15.9% to AUD 608,962.
- Brisbane’s Loganlea district climbed by 14.2% to AUD 816,658.
- Sydney’s Fairfield district increased by 12.4% to AUD 1.171 million.
These areas, offering relatively lower prices and better value for money, have attracted many homebuyers.
▲ Impact of Interest Rate Cuts: Driving Market Growth
Last month, the RBA cut the interest rate by 25 basis points to 4.1%. The Commonwealth Bank and Westpac anticipate three more cuts, bringing the rate down to 3.35%. AMP economist Shane Oliver predicts that by the second half of 2025, housing price growth will accelerate further. Lower interest rates not only increase bank lending, benefiting the entire housing market, but also ease financial burdens for homeowners,
reducing distressed property sales. Additionally, rate cuts enhance borrowers’ purchasing power, significantly boosting housing demand.
▲ Market Outlook: Opportunities and Challenges
Australia’s real estate market is displaying a clear trend of regional divergence in a complex and evolving environment. Interest rate cuts have provided buyers with confidence, and high-end property markets in cities like Sydney and Melbourne are expected to recover first. However, overall price growth is constrained by factors such as declining immigration and limited housing supply. As the RBA continues its easing policy and economic conditions change, new opportunities and challenges may emerge in Australia’s property market. Homebuyers and investors should closely monitor market trends and policy shifts to make informed decisions.
