The Albanese government’s 5% deposit scheme for first home buyers, which came into effect on 1 October, had the desired effect on home prices.
Cotality’s daily dwelling values index, which covers the five major capital city markets, surged by 1.1% in October, driven by Perth (1.9%), Brisbane (1.6%), and Adelaide (1.4%).
Over the October quarter, Cotality’s daily dwelling values index rose by 2.8% at the five-city aggregate level, with Perth (4.8%) and Brisbane (4.0%) experiencing explosive growth.
Over the first 10 months of 2025, dwelling values at the aggregate five-city level have risen by 5.9%, with Brisbane (9.1%) and Perth (8.8%) leading and Melbourne (3.9%) continuing to lag.
The following chart plots dwelling values across the five major markets on a rolling 28-day basis. You can see the recent explosion of growth, which has hit a two-year high at the aggregate five-city level.
The unexpectedly high CPI inflation data this week could thwart the house price boom. Most economists are now tipping no more rate cuts for the foreseeable future.
As a result, buyers are likely to be less confident in bidding up prices, knowing they are unlikely to obtain further interest rate relief.
Even before Wednesday’s inflation shock, the auction market was losing momentum.
Last weekend’s final auction clearance rate fell to 66.7% across the combined capital cities, the lowest level since the week ending 22 June (65.3%).
The monthly average clearance rate in October fell to 67%, the lowest since June 2025.
It will be fascinating to see how this weekend’s auctions react to the news that rates are unlikely to fall in the near future.
How much further can housing prices, which are currently historically high in relation to income, rise without the stimulation of additional rate cuts?
Are we reaching the end of the housing price boom? Will it be followed by Canadian and New Zealand-style busts?
