Groundswell Property Market Insights
Rates Have Dropped, But Prices Haven’t Boomed: Why Supply, Sentiment and Migration Are Driving the Market in 2025 - Market movements at 07 June 2025
Welcome to this week’s edition of Groundswell Property’s Market Insights, where we cut through the media noise and deliver real, data-driven updates on Australia’s ever-changing property market.
Josh Fotheringham, Unsplash
The headlines say rate cuts are sparking a boom. But don’t believe the hype. This week’s data shows that Australia’s housing market is being shaped more by fundamentals like low supply, regional migration, and investor confidence than by the Reserve Bank’s movements.
Here’s what’s actually happening behind the noise:
🔻 Interest rate cuts haven’t caused a price surge
🌄 Regional migration continues to rise, with Greater Geelong now leading the pack
💼 Investors are returning to the market, outpacing owner-occupiers 3 to 1
📊 House and unit prices hit record highs, especially in regional and smaller city markets
🏠 Rent growth continues, but the pace is easing as vacancies rise
Rates Have Dropped, But Prices Haven’t Boomed
If you believe media reports – and let me stress that you cannot - Australia is going to have the grandaddy of all property booms because interest rates have dropped.
Much of the commentary around RBA decisions on rate cuts declares that a small drop in rates means markets are going to go crazy.
They won’t. And to say they will defies all logic and contradicts historical precedents.
People who don’t understand real estate dynamics, including 100% of journalists and 99% of economists, think everything is dictated by interest rates.
That means most of what you’re reading and hearing in news media is misinformation, likely to lead to bad decisions involving hundreds of thousands of dollars.
The reality is that where property prices are rising has little or nothing to do with interest rates.
It’s about buyer demand, fuelled by strong local economies, at a time of low supply.
We’re not building enough homes to meet demand, and high construction costs mean the idea of affordable housing is a cynical work of fiction.
There were rate cuts in February and May this year. According to Cotality figures in the first five months of 2025, national dwelling prices rose just 1%, which hardly supports the contention that prices have exploded since the cuts began.
Some markets are looking stronger – like Melbourne and Darwin – but those improvements were first evident in the latter part of 2024, long before the first reduction in interest rates.
Remember that before these two minor rate cuts, we had 13 rate increases, and prices didn’t fall everywhere; there were price rises in most markets.
This proves, yet again, that there are forces driving markets which are far stronger and more influential than interest rates.
Regional Populations Surge
In good news for the continuing growth of regional property markets, the number of people leaving capital cities behind increased again in the first quarter of 2025.
The March 2025 quarter Regional Movers Index, which tracks migration to regional areas, shows a 10.5% increase in moves from cities to the regions in the first quarter of the year.
Regional Australia's population is now estimated to be 9.91 million people.
The report shows that city residents moving to regions outnumbered regional people making a move in the opposite direction by 25%.
For the first time in more than two years, the Sunshine Coast was toppled from the top spot for capital city to regional movers.
Greater Geelong took out the top spot with a 7.4% share of regional movers, followed closely by the Sunshine Coast with a 7.3% share, and then the Gold Coast with a 4.4% share.
Greater Geelong also headed the list of locations where people moved from any location in Australia (both from cities and other regional centres). It experienced a significant increase in net migration during the 12 months to March 2025, resulting in it accounting for 9.3% of all net migration to regions.
The Sunshine Coast is again in second spot, Lake Macquarie in NSW is third on the list, Moorabool in Victoria is fourth, while Maitland in NSW rounds out the top five.
CoreLogic’s June Home Value Index shows that the value of the combined regional property markets increased by 1.6% in the past quarter. Over the past 12 months, regional property values are up 5.3% and capital city values are up 2.6%.
Investor Revival
New lending data shows that investors are back in action and re-entering the market at three times the pace of owner-occupiers.
Analysis of lending data by Money.com.au shows the number of loans to all buyers is up by 10.5% in the 12 months to March.
The number of investment loans increased by 19% during the same period, while the number of owner-occupier loans rose by just 6%.
Money.com.au general manager of lending, Jacob Overs, says the figures are a sign of returning investor confidence.
There were 196,241 new investor loans written in the 2025 March quarter.
“We’re just shy of the investor loan peak set in 2022,” Overs says.
The average loan size to investors in the March quarter is $673,033, which is 7.9% higher than at the same time last year. Investors are also leading refinancing activity, with investor refinancing hitting a new record of 173,948 loans.
Overs says investors appear to be reassessing Victoria as an investment market. While high taxes and fees on investors have led many to leave the market in the past year, investor loans in Victoria increased in the first quarter of the year.
Rents Growing But Pace Slowing
While rents continue to grow throughout Australia, the pace of growth is now beginning to slow.
Analysis from the Australian Bureau of Statistics says that since late 2024, the pace of growth in median rents has slowed across most states and territories.
It says that since mid-2022, rents for almost all properties with new tenants have been higher than the rents charged to the previous tenants.
However, in April 2025, 10% of properties with a new tenant experienced no rent increase, compared to 5% a year earlier.
New South Wales continues to have the highest median asking rent of $650 per week, followed by Western Australia ($613 per week), ACT ($595), Queensland and the Northern Territory ($560), Victoria ($520), South Australia ($495) and Tasmania ($430).
According to SQM Research data, vacancy rates are increasing across much of Australia, which is helping ease rental growth. In April 2025, the national vacancy rate rose to 1.3%, up from 1.1% 12 months earlier.
SQM Research managing director Louise Christophers says increasing supply in Melbourne and Sydney gives tenants more options.
He says it is typical for the renal market to go into “somewhat of a lull” in winter.
Property Prices Hit High
Property prices have chalked up a fifth consecutive month of growth.
The latest increases bring yearly median house price growth to 4.2% and unit price growth to 3.6%.
PropTrack data show that in May, medians rose marginally in every capital city house market and most unit markets. Hobart and ACT unit markets were the exception with small declines.
PropTrack senior economist, Eleanor Creagh, says the latest growth has resulted in a new record high for Australian home values.
Perth’s median house price ($787,000) is now higher than Melbourne’s ($782,000) for the first time in a decade. Despite this, Creagh says the Perth market is showing signs of moderation.
As has been the case for some time now, it is the smaller capital cities and regional markets that are achieving the most solid price growth.
Regional South Australia was the strongest performing house market in the past 12 months, with medians up 12%, followed by Adelaide (up 11.1%) and Regional Western Australia (up 9%).
In the unit market, Perth had the highest growth of 12.3%, followed by Brisbane, 11.4% and Adelaide, 10.3%. Creagh says the figures show improving sentiment and buyer confidence. She says supply constraints continue to play a significant role in driving price growth.
Key Takeaways:
Despite what you might hear in the media, interest rates aren’t the magic lever they’re made out to be. What’s truly driving the market is a mix of low supply, shifting population trends, and renewed investor confidence.
If you're looking to build or reshape your property portfolio, now’s a great time to get clear on your next move — not based on headlines, but on facts.
Ready to make 2025 the year you realise your potential as an investor?
🎯 Book your complimentary discovery call with our expert team using the link below. Gain confidence, get clarity, and secure your own plan for success.
Tom Haigh
Director & Licensed Buyers Agent
Groundswell Property - a decade of trusted advice
tom@groundswellproperty.net
0439754475