Green light for house price boom

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It is clear that Australia is on the verge of another house price boom.

As illustrated below by Alex Joiner from IFM Investors, both Cotality’s and PropTrack’s dwelling value series lifted strongly in August, continuing the run of strong results.

Australian dwelling prices

If you’re struggling to afford a home, the only worse news than the Cotality dwelling price data is the PropTrack dwelling price data. The 8 capital city median is $938,000 for Proptrack compared with $932,000 for Cotality”, Joiner wrote on Twitter (X).

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CBA Associate Economist Lucinda Jerogin also released a chart pack showing “building housing market momentum… fuelled by the RBA’s rate cutting cycle”.

The following chart from Jerogin shows that home price expectations edged up 0.9% in August to the second-highest level since 2013, according to Westpac/Melbourne Institute.

Sentiment and dwelling prices
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As you can see, this indicator has historically been a good leading indicator of price growth.

“The third rate cut by the RBA this cycle has boosted sentiment”, noted Jerogin.

The next chart from CBA shows that auction clearance rates lifted sharply across Australia in late August following the mid-month RBA rate cut:

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Auction clearance rates

“Auction clearance rates now sit at 70% nationally, the highest since February 2024”, Jerogin noted. “Buyer demand is rising as borrowing capacity and real incomes rise”.

Meanwhile, total listings volumes continue to slow and sat at 22.5% below the five-year average in August 2025.

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Total listings

“Constrained supply is supporting monthly home price gains, as buyer demand outpaces supply”, noted Jerogin.

The following chart from CBA shows the extent to which house price growth has responded to the three rate cuts from the RBA:

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dwelling prices versus interest rates

The next chart shows that the 0.75% worth of rate cuts has improved mortgage affordability, which has boosted demand.

Housing affordability
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However, CBA predicts a weaker upswing compared to previous rate-cutting cycles because affordability remains stretched.

“We continue to expect home prices to lift by ~6% in 2025, supported by the RBA’s rate cutting cycle”, noted Jerogin.

“Home prices are rising across most regions, however as we noted in our forecast refresh, the pace of growth will remain modest relative to previous upswings”.

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The Albanese government’s 5% deposit scheme for first home buyers, which comes into effect on 1 October 2025, will provide further stimulus to the market.

As a result, I would not be surprised if home prices rise by more than expected.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.