According to the latest PropTrack Home Price Index, all capital cities experienced price growth in May, with capital city markets leading the gains at 0.45 per cent overall.
Sydney, Brisbane, Adelaide, Perth and Darwin have all reached new price peaks.
Melbourne recorded the strongest monthly increase at 0.79 per cent, continuing its recovery after a prolonged period of softer growth.
Despite this recent surge, Melbourne’s home values remain 2.85 per cent below their peak.
In a significant change, Perth’s median home value of $787,000 has overtaken Melbourne’s $782,000 for the first time in a decade.
This comes on the back of Perth’s persistent outperformance in recent years compared to Melbourne’s relative weakness.
Adelaide continues to lead annual growth among capital cities at 11.04 per cent, followed by Perth at 8.40 per cent and Brisbane at 8.38 per cent.
While these markets maintain their lead in yearly terms, momentum is increasing in previously lagging markets like Melbourne, Canberra and Hobart.
Regional areas also saw positive movement with prices rising 0.25 per cent in May.
Annual growth in regional areas reached 5.19 per cent, outpacing the combined capitals at 3.71 per cent.
Regional home prices are now 65 per cent higher than they were five years ago.
REA Group Senior Economist Eleanor Creagh said the growth trend is becoming more uniform across major cities.
“Price growth across the capitals is starting to converge,” Ms Creagh said.
“Melbourne, which previously lagged the other capitals, is now seeing home price growth pick up.
“Cities such as Perth and Brisbane are now seeing growth moderate after strong outperformance.”
The recent interest rate cuts have been a significant factor in boosting the property market, according to Ms Creagh.
“Lower interest rates have lifted borrowing capacities and boosted buyer demand,” she said.
“And with further price increases and rate cuts expected, prospective buyers are moving off the sidelines and accelerating their purchasing decisions.”
Despite the positive momentum, affordability remains a concern for many potential buyers.
However, several factors are expected to maintain upward pressure on prices.
“Looking ahead, while stretched affordability will remain a constraint, a chronic lack of new housing supply, population growth, and targeted buyer incentives are expected to keep upward pressure on prices,” Ms Creagh said.
“In combination with interest rates continuing to move lower, these factors are likely to drive further price growth throughout the remainder of 2025.”
