In February 2025, Australia’s housing market displayed signs of modest recovery, with the CoreLogic Home Value Index reporting a 0.3% rise nationally. Although this increase marks a reversal from therecent downturn, the improvement has been gradual and measured. This development is particularlysignificant for homeowners and first homebuyers alike, as it reflects improved market sentiment rather than a sudden surge in property values

Key capital cities such as Melbourne and Hobart have led the rebound, each registering a 0.4%monthly increase after a period of decline. In Melbourne, the market is emerging from a prolongedslump,while Hobart’s resurgence offers hope to those who have experienced recent challenges.However, in cities like Sydney and in many regional areas, the recovery remains more subdued.Prospective buyers are advised to note that modest price gains do not necessarily translate into enhanced affordability

One key driver behind the current market improvement is the anticipation of lower interest rates.Expectations of rate cuts have bolstered consumer sentiment and contributed to a market environmentwhere auction clearance rates are returning to long-run averages. Nonetheless, experts caution thatimproved sentiment does not automatically result in greater borrowing capacity. For potential buyers,this means that while conditions are gradually improving, securing favourable mortgage terms remains paramount

Regional markets, which have often outperformed major cities, experienced a 0.4% monthly increase.These areas benefit from a combination of limited new listings and relatively better affordabilitycomparedto the larger urban centres. Despite these gains, many potential buyers still face significant challenges due to constrained supply and broader economic pressures. This modest recovery shouldbe seen in the context of ongoing affordability concerns that affect households across the country

In addition, the rental market is undergoing a subtle transformation. Rents increased by 0.6% inFebruary, marking the strongest monthly gain since last May, yet this growth remains below previouspeaks observed duringearlier rental booms. Coupled with moderating migration trends and shiftinghousehold sizes, this slowdown in rental growth suggests that both buyers and tenants must adjusttheir expectations in an evolving economic landscape

For homeowners and first home buyers, the current market conditions present opportunity andcaution. While the modest rebound offers aglimmer of hope, the prevailing challenges of affordabilitypersist. In a climate where improved sentiment is not yet matched by significant increases in borrowingcapacity, prospective buyers must prioritise financial planning. A measured approach to propertyinvestment is advisable, ensuring buying is based on long-term stability rather than short-termfluctuations.

Australia’s housing market showsearly signs of recovery, though the situation remains complex.Market improvements have been modest and are driven more by shifting sentiment than by dramaticchanges in affordability. For many, the journey to homeownership continues to be challenging. Itisessential for buyers to stay informed, exercise financial discipline, and seek professional advice tonavigate this dynamic environment effectively