August rate cut ignites housing acceleration with strongest monthly growth in over a year

Australia's housing market responded quickly to August's 0.25 per cent rate cut, with national house price growth surging to 1.3 per cent monthly growth, a dramatic acceleration from July's flat performance. The cut, along with expectations of at least one more cut in 2025, has reignited buyer confidence and delivered the strongest monthly growth in over a year.

National house prices reached $961,000 in August 2025, whilst unit prices climbed to $710,000, representing robust annual growth rates of 8.0 per cent and 6.3 per cent respectively. The immediate impact of lower borrowing costs was evident across all major markets, with even previously subdued regions showing renewed strength.

Perth maintained its position as the nation's standout performer, with house prices jumping 1.7 per cent monthly to $970,000, delivering extraordinary annual growth of 12.4 per cent. Perth units were equally impressive, posting 1.7 per cent monthly growth and a remarkable 14.5 per cent annual gain to reach $644,000.

Brisbane houses surged 1.6 per cent monthly to $1.09 million, closely matching Perth's pace and reinforcing Queensland's position as a key growth market with annual gains of 10.5 per cent. This marked a significant rebound from Brisbane's tepid 0.2 per cent July performance, highlighting how quickly sentiment can shift when borrowing costs fall.

Sydney houses accelerated to 1.5 per cent monthly growth, reaching $1.68 million, whilst maintaining solid annual growth of 6.3 per cent. More notably, Sydney units demonstrated exceptional resilience with 1.0 per cent monthly growth to $920,000, continuing their strong trajectory from July when they were the only market segment nationally to improve during the rate hold period.

Melbourne shows early signs of recovery

Melbourne's long-running weakness showed tentative signs of stabilising in August, though the Victorian capital remains the laggard among major markets. Melbourne houses posted 1.1 per cent monthly growth to $1.06 million, a notable improvement from July's 0.1 per cent decline. Annual growth of 4.3 per cent, whilst modest by current national standards, represents the city's strongest yearly pace in recent months.

Melbourne units provided further evidence of potential recovery, maintaining steady 0.8 per cent monthly growth to reach $643,000. However, at just 3.1 per cent annual growth, Melbourne units significantly underperform the national average of 6.3 per cent.

The Melbourne market's protracted weakness reflects several structural challenges including being one of the most heavily taxed states for property, as well as having the highest unemployment rate. However, the August response to rate cuts suggests underlying demand remains intact, and further monetary easing could provide the catalyst for a more substantial recovery.

Units outperform in tight supply environment

The unit market's remarkable resilience continues to be one of the standout stories of 2025, with apartment prices demonstrating consistent growth even during periods of house price volatility. National unit growth of 1.0 per cent monthly significantly exceeded expectations, driven by chronic undersupply and affordability-driven demand from buyers priced out of the detached housing market.