Ray White Group Chief Economist, Nerida Conisbee, said that the market acceleration which began in January 2025 has intensified significantly, creating conditions similar to the boom of 2021.
“May’s data confirms the housing market’s relentless acceleration that began in January has far exceeded initial expectations, with national house prices rising 0.7 per cent to reach $926,806, delivering annual growth of 5.2 per cent,” Ms Conisbee said.
“What began as a modest recovery from December’s brief decline has evolved into sustained momentum that few predicted at the start of 2025.”
The momentum has been further fueled by the Reserve Bank’s second interest rate cut in April, with two additional cuts anticipated before year’s end according to Ms Conisbee.
Perth continues to lead the capital cities with extraordinary growth, advancing 1.2 per cent in May alone, bringing annual growth to 10.8 per cent and pushing the median house price to $922,250.
“If current growth rates continue, Perth requires just eight months to reach a one-million-dollar median,” Ms Conisbee said.
Adelaide is following closely behind with robust annual growth of 7.1 per cent, reaching a median of $912,728, and is expected to join the million-dollar club within approximately fifteen months.
Ms Conisbee said that Sydney’s trajectory is particularly remarkable, with the harbour city on pace for a two-million-dollar median by late 2026.
“Sydney’s acceleration toward two million dollars continues with it now sitting at $1.6 million,” she said.
“Given Sydney’s sensitivity to rate cuts and the potential for more cuts coming through this year, hitting a $2 million dollar median seems possible by the end of next year.”
The unit market in Sydney is also approaching a significant milestone at $900,289, appearing destined to join the million-dollar club in the near future.
Regional markets are outperforming their capital city counterparts according to Ms Conisbee, with Regional Western Australia posting 11.5 per cent annual growth and Regional South Australia achieving 10 per cent.
“This demonstrates the breadth of current price pressures across the Australian property landscape,” she said.
Underlying the price growth are persistent construction challenges that continue to limit new housing supply.
Ms Conisbee explained that the construction industry’s ongoing struggles with labour shortages and material costs have created supply bottlenecks that cannot be resolved quickly.
“In addition, land prices aren’t coming down and will in fact be supported by lower rates,” she said.
Despite the strong growth trajectory, Ms Conisbee identified several factors that could potentially disrupt this momentum.
“Rising unemployment resulting from slowing global economic growth triggered by trade tensions could weaken buyer demand, despite interest rate cuts providing some offset,” she said.
“Perversely, the current surge in prices may kick-start more development projects as margins become attractive enough to overcome construction challenges, ultimately increasing supply.”
