Quick Bite – What’s Your House Worth?
According to the latest report from the Australian Bureau of Statistics, the national mean price of Aussie houses passed $1 million for the first time in the March quarter 2025, rising 0.7% to $1,002,500. Western Australia, South Australia and Queensland were the main drivers of the rise, with Queensland reaching the second highest mean price in Australia, behind NSW.
The total value of Australia’s residential housing market climbed $131 billion (or 1.2%) to $11.4 trillion. All states and territories recorded growth in the March quarter, but the annual growth rate slowed to 5.9%, a reduction in the fast pace of growth of 9.5% at the same time last year.
The number of residential homes grew to 11.3 million, up 53,000 from the December quarter.
Source: SMH
Reflecting on a survey of Australian consumers, Westpac economist Matthew Hassan said house price expectations had surged to the highest level since 2013 according to the Westpac-Melbourne Institute index. “Over three-quarters of consumers expect prices rise over the next 12 months. Consumers are particularly bullish in Queensland and NSW, but less so in Victoria.”
Hassan said the Reserve Bank’s decision to cut interest rates in May, and the bank’s more positive tone, had boosted consumers’ housing-related sentiment.
RBA governor Michele Bullock last month revealed the board had considered slicing rates by half a percentage point before settling on a quarter percentage-point cut, marking a major departure from the cautious tone struck by the bank over the past few years. The RBA cut rates for the first time in four years at its February meeting this year before bringing it down to 3.85% in May.
Lower interest rates reduce mortgage payment costs for home buyers, but can also push up demand for housing and therefore house prices.
Economists are putting the chance of a 25bp rate cut on 8 July at 80%. AMP economist Diana Mousina said she expected home prices to lift between 5-6% per cent over the next 12 months.
The “prestige” house market
As the number of high net worth individuals in Australia grows, so does the nation’s prestige property market, and the volume of $5 million+ home sales has more than doubled since 2020, Westpac and Cotality research reveals.
There were 3,295 sales of $5 million+ properties across the nation in 2024, a 5% rise from 2023 and 55% more than in 2020, before the property market hit its peak in 2021.
Source: AFR
Apart from housing issues, the Westpac–Melbourne Institute Consumer Sentiment Index rose 0.5% to 92.6 in June. The overall mood remains broadly unchanged with consumers stuck in a holding pattern of “cautious pessimism”. Two forces are at work here: on the positive side, the RBA’s May interest rate cut and moderating inflation are providing significant boosts, particularly around buyer attitudes towards major purchases. But against this, more sluggish growth domestically and the unsettled situation around global trade are continuing to weigh heavily on expectations.
News on “international conditions” is seen as a very clear negative. This is not surprising, given the ongoing drama surrounding Trump Administration announcements around tariffs.
Australian consumers are less confident about jobs. The Westpac Melbourne Institute Unemployment Expectations Index rose 5% to 127.4 in June (higher index mean more consumers expect unemployment to rise). The Index is still relatively positive but now only slightly better than the long-run average read of 129.
On housing, the “time to buy a dwelling” index increased 3.6% mom, as mortgage rate expectations continue to fall and house price expectations rose.
Consumer sentiment edged higher in June.
Source: Goldman Sachs
Risk aversion increased in the last quarter, according to a Goldman Sachs survey. On the wisest place of savings, 55% of consumers nominated bank deposits or paying down debt in June, compared to 52% in March.
Source: Goldman Sachs
