What's behind the latest rise in Australian property prices?

Home values across the country ticked up for the sixth month in a row during July, new data released by Cotality has revealed.

National dwelling values grew by 0.6% throughout the month, according to Cotality's latest Home Value Index, pushing up the median value of a home in Australia to $844,197.

Tim Lawless, research director at Cotality, says that the recent period of growth has largely coincided with the reduction in interest rates that started in February.

However, he notes that the rate of growth in property prices appears to have stabilised as factors like affordability have started to weigh in.

"At the national level, the pace of growth in housing values is no longer accelerating," Lawless says.

"Rather, we have seen growth rates holding a little above half a percent from month to month since May as the opposing influence of low supply, falling interest rates and rising confidence run up against affordability constraints and lingering uncertainty."

Even with the ongoing affordability issues confronting many buyers, Cotality expects that home values will continue to be driven higher by further rate drops and supply limitations as 2025 progresses - though at a relatively modest clip.

Cities and regions see price rises

Property values in every capital city increased during July, but Darwin stood out from the pack with a 2.2% growth rate during the month.

"While the Darwin trend doesn't have much influence on the headline numbers, the Top End capital has moved into a solid upswing, posting a 9.7% gain through the first seven months of the year," Lawless says.

"The mid-sized capitals are also once again standing out, especially Perth, where the monthly pace of gains has accelerated to the fastest rate of growth since September last year."

Growth was more muted in Hobart, Melbourne and Canberra, with the latter two markets also notching the lowest annual change in dwelling values.

Outside of the capital cities, properties in regional areas also recorded price growth.

Overall, Cotality's combined regional index was up 0.6%, though regional Queensland and South Australia recorded the highest growth over the month.

Disparity between houses and units grows

In the last three months alone, Cotality notes that the median house value in Australia has gone up by 1.9% to $912,563. Put another way, $16,700 has been added to that median value.

By contrast, unit values have risen by 1.4% to $690,011 over the same period - an addition of $9,700 to the median value.

As a result, Cotality says that the value gap between houses and apartments is as large as it's ever been - a fact that may make upsizing more difficult for some owners in the future if it continues to grow.

"Such a wide difference comes amid ongoing affordability constraints and a lack of newly built multi-unit housing supply, which seems counter-intuitive," Lawless says.

"Clearly, demand preferences are still weighted towards detached housing options despite the substantially lower price points available across the unit sector."

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