The latest CoreLogic Home Value Index (HVI) data for March has revealed some interesting trends in the Australian property market. After months of price declines, Melbourne and Sydney are making a comeback, with the housing downturn reversing in February.

Let’s break down what’s happening in the market and what it means for buyers and investors.

Melbourne Bounces Back After 10 Months of Decline

Melbourne and Hobart recorded a 0.4% price increase in February, marking a significant shift. This city, in particular, had been in decline for 10 consecutive months, taking a heavy hit in property values. Now, it’s back on top, showing strong signs of recovery.

Sydney, Perth, and Adelaide also saw similar growth levels, which is a change from the trend of the last year, where smaller markets like Perth, Brisbane, and Adelaide dominated price growth while Sydney and Melbourne lagged.

Luxury Property Leading the Charge

A key shift in the market is that price growth is now strongest at the top end of the market. High-end properties in Sydney and Melbourne are seeing the biggest gains.

Previously, with high interest rates limiting borrowing power, buyers focused on more affordable properties. This led to strong growth in outer suburbs and value markets like:

  • Mount Druitt and Campbelltown (Sydney)
  • Logan (Brisbane)

Now, the focus has shifted to luxury properties, driven by improving market sentiment and expectations of interest rate cuts.

Why Are Luxury Homes Rising Faster?

Luxury properties are more sensitive to interest rate changes than lower-end markets. When interest rates fall, high-end property buyers feel more confident and spend more.

This is all about sentiment—how people feel about the market. When buyers believe prices will keep rising, they’re more willing to pay a premium. This creates momentum, leading to further price growth.

A good comparison is grocery shopping when hungry—you buy more because your feelings influence your decisions. The same happens in real estate: when confidence is high, people spend more.

Regional Markets Outperforming Capital Cities

Regional markets are still outperforming capital cities, with 0.4% growth compared to 0.3% in metro areas. This includes areas like:

  • Dubbo (NSW)
  • Newcastle (NSW)
  • Toowoomba (QLD)

These regions offer affordable properties (sub-$500K to $550K range) and strong cash flow potential, making them attractive for investors.

Low Supply Is Driving Prices Higher

Property listings are 7.9% below the five-year average, meaning fewer properties are available. This low supply, combined with:

  • Falling interest rates
  • Improving buyer confidence

…is pushing prices higher.

More Interest Rate Cuts Are Coming

History shows that interest rate cuts rarely happen in isolation—they tend to come in clusters. With inflation stabilising, more rate reductions are expected, leading to:

  • Cheaper borrowing costs
  • More demand for property
  • Further price growth

What This Means for Buyers and Investors

With prices rising, interest rates falling, and sentiment improving, now is the time to take action. Delaying could mean paying more in the months ahead.

If you’re looking to buy, consider markets with strong growth potential and act before affordability worsens. The window of opportunity is still open—but it’s closing fast.