The Australian property market continues to strengthen following Labor's election victory, with last week recording the highest auction volume since Easter. A total of 1,784 homes went under the hammer across capital cities, up 11.8% from the previous week, though still 20.3% below the same period last year. The preliminary auction clearance rate held above 70% for the second consecutive week, pointing to sustained market momentum as buyers and sellers respond to improved certainty.
Melbourne has emerged as the standout performer, with inner Melbourne recording the nation's strongest quarterly price growth at 3.6% for houses and 5.9% for units since February's rate cut. This represents a remarkable turnaround for a market that had previously lagged behind other capitals, with agents reporting increased interest from interstate investors attracted by Melbourne's relative affordability compared to other capital cities.
With auction volumes at post-Easter highs and another cut expected next week, strategic opportunities are emerging.
"Melbourne's dramatic rebound shouldn't surprise anyone following the fundamentals. When a market underperforms for an extended period while maintaining strong employment and population growth, it eventually becomes too compelling for investors to ignore. We're now seeing Melbourne properties at price points below Brisbane and Adelaide – a situation that's creating a once-in-a-decade opportunity for strategic investors," says Godfrey Dinh, CEO of Futurerent.
"We're getting a lot of buyers from NSW looking to invest in Melbourne because their market is really expensive at the moment. Caulfield and Caulfield South has become a lot more popular with bayside buyers as well, areas like Brighton, Elwood and Elsternwick, they're getting more interested because there's better value here," notes Buxton agent Leigh Hoffman.
Key Highlights
- The cost of building a new house has hit a record high of $504,109, up 52.6% from March 2019
- Auction clearance rates held above 70% for the second consecutive week, with Melbourne recording 73.2%
- Investment activity has surged nationally to levels not seen in nearly a decade, with Victoria as the one notable exception
- Melbourne's inner suburbs lead the national recovery with house prices up 3.6% and units up 5.9% since February's rate cut
- 1,784 homes went to auction last week, the highest volume since Easter and up 11.8% from the previous week
- Melbourne units in select suburbs have defied the citywide trend with dramatic price growth of up to 31.9% (Caulfield South)
Auction Markets Continue Strengthening
Last week saw 1,784 capital city homes go to auction, representing the highest volume since the pre-Easter period when 3,066 properties were offered. This 11.8% increase from the previous week demonstrates growing market confidence, though volumes remain 20.3% below the same period last year when market conditions were considerably stronger.
The preliminary clearance rate remained robust at 70.2%, virtually unchanged from the previous week's 70.1% (which revised down to 63.1% on final numbers). This marks the second consecutive week with clearance rates above the 70% threshold, indicating sustained buyer demand.
National auction clearance rates

"Auction clearance rates holding above 70% for consecutive weeks, even with increased volumes, signals genuine depth in buyer demand. What's particularly notable is Melbourne's 73.2% clearance rate with 830 auctions – that's serious buying power emerging ahead of next week's expected rate cut. Smart investors are recognising this trend early and moving before mainstream awareness catches up," notes Godfrey Dinh, CEO of Futurerent.
Melbourne hosted 830 auctions, up from 776 the previous week. While the preliminary clearance rate eased slightly from 74.4% to 73.2%, this still represents the city's second-highest preliminary clearance rate so far this year. Sydney saw 665 auctions (up from 562), with a preliminary clearance rate of 67.7%, marking the eighth consecutive week below the 70% mark.
Among the smaller capitals, Adelaide recorded the highest volume with 116 auctions and a preliminary clearance rate of 66.7%, its best result in three weeks. Brisbane's 109 auctions achieved a 69.7% clearance rate, the highest since August last year.
Looking ahead, approximately 1,600 auctions are expected this week, before rising to around 2,200 next week.
Melbourne's Remarkable Recovery
Melbourne's property market has staged a dramatic comeback in recent months, emerging as the surprising leader in price growth following February's interest rate cut. Inner Melbourne has recorded the strongest quarterly growth nationally, with house prices rising 3.6% and unit prices surging 5.9% since early February.

This represents a significant turnaround for a market that had previously underperformed compared to other capitals. While inner Melbourne house prices remain 1.1% lower than a year ago, units have now recorded positive annual growth.

The data suggests Melbourne's long-awaited recovery is now well underway, with prices for homes close to the CBD growing strongly off the back of the latest interest rate cut. REA Group senior economist Anne Flaherty attributes this shift to Melbourne's relative affordability after years of price stagnation.
"Home prices have underperformed the rest of the country so much and are now cheaper than Brisbane, Adelaide and on track to be cheaper than Perth," she said. "That's driving a lot of people to see value on the Melbourne market."
Buyer sentiment towards Melbourne has improved dramatically, with REA Group's most recent Residential Audience Pulse survey finding 40% of Victorian buyers felt it was a good time to buy property – a higher proportion than any other state.
"We've seen a really strong turnaround in how buyers view Melbourne," Flaherty noted, with more Victorians now expecting prices to rise further this year according to the latest Westpac-Melbourne Institute Index of House Price Expectations, which recorded "a particularly big 14% rise in Victoria."
This improving sentiment is translating to buyers seeking value in areas adjacent to traditional hotspots. Nelson Alexander Flemington principal Jayson Watts explains: "We're getting a lot of people priced out of Fitzroy and Carlton who are coming over to Flemington and Kensington. That hasn't happened for about three years. We've seen the bottom of the market and talks of further rate cuts are starting to get people thinking that in 12 months' time it's going to be worth more."
Melbourne's Standout Suburbs
While Melbourne's overall unit market saw prices fall 3.6% to a median of $550,000 in the year to March, several suburbs have recorded exceptional growth, significantly outperforming the broader market.
Top Performing Melbourne Suburbs - unit price growth

Domain data shows unit prices in Caulfield South surged an impressive 31.9% over the 12 months to March, reaching a median of $789,000. Springvale followed with 23.1% growth to $600,000, while Preston saw prices rise 20.6% to $600,500.
"Value opportunities exist for investors who look beyond headline figures. When you see suburbs like Caulfield South recording 31.9% growth while the broader Melbourne unit market is negative, it highlights the importance of suburb-level research rather than city-wide generalisations," observes Godfrey Dinh, CEO of Futurerent.
Domain chief of research and economics Dr Nicola Powell noted that double-digit growth in unit prices is not the norm in the current market. "What that tells us is that there's not many suburbs for units that are performing well," she said. "There's [eight] suburbs [with growth] over 10% and only a few performing really well."
Local agents report that these growth areas are attracting diverse buyer groups. "The market's really starting to kick because of the rate cut and there's a lot more confidence," said Buxton agent Leigh Hoffman. "We're getting a lot of buyers from NSW looking to invest in Melbourne because their market is really expensive at the moment."
Both Hoffman and Woodards agent Lentini pointed to increased investor activity, particularly from interstate buyers seeking value. "Real estate is in a cycle," Lentini observed. "Melbourne's got good value at the moment so they're coming back in."
First-Home Buyers Racing Against Time
Melbourne first-home buyers are being advised to act quickly rather than waiting for interest rate cuts and election promises to materialise. Real Estate Institute of Victoria president Jacob Caine expects forward-thinking buyers to move as early as this weekend.
"I think we could definitely see those savvier first-home buyers drive things as they seek a first-mover advantage," Caine said. "And it's not going to be getting cheaper for them to buy a home."
Buyer advocates are recommending specific areas for first-home buyers, particularly suggesting older-style apartments in Melbourne's east and south east that were built as affordable alternatives to houses. McCabe advised focusing on Hawthorn, St Kilda, Elwood, South Yarra and Armadale, with one-bedroom apartments ranging from $450,000-$650,000 and two-bedroom options starting from $650,000.
"They will be better off now than they will be by the end of the year," McCabe said, adding that with most of the recent federal election promises aimed at supporting buyers rather than boosting supply, prices would likely continue rising through 2025 and into 2026.
This sense of urgency is echoed by industry professionals like BigginScott Richmond director Andrew Crotty, who observed: "Rents are high so if you're a first-home buyer or a young couple it's the perfect time to jump in."
Investor Activity Surges Nationally, Victoria Lags
Australian investor activity has reached levels not seen in nearly a decade, with tight rental markets and anticipated rate cuts driving renewed interest. The number of new loans to investors has risen substantially in the past 18 months, following a quieter period after the RBA began raising rates in mid-2022.
New investor loans - National

Persistent low rental availability and continued strong rent growth have encouraged this pickup in investor activity. As a result, investors now represent a substantial share of new lending – close to historic highs in some smaller states and nationally at the highest level since 2017.
Investor share of new housing lending

However, Victoria stands as the key exception to this trend. Investor activity has not increased to the same extent as in other states, with investors representing a smaller proportion of new buyers. Simultaneously, investor sales account for around three in ten listings in Victoria – similar to Sydney but higher than other states.
This combination of fewer investor buyers and relatively high investor sales has contributed to a decline in rental property numbers in Victoria. Data from the Victorian Residential Tenancies Bond Authority shows that the number of active bonds – a rough proxy for occupied rental properties – has fallen over the past year, potentially exacerbating limited rental availability and putting pressure on rents.
Number of active rental bonds – Victoria
As at quarter end

PropTrack senior economist Angus Moore suggests several factors may be driving this phenomenon: "That slower rent growth relative to other states may be part of the reason why investors haven't been as interested in Victoria; policy changes around land tax may also be playing a role. But as rates fall, and with Melbourne home prices now lower than Adelaide and Brisbane, investors may start turning their attention back to Victoria."
This unique investor landscape in Victoria, combined with Melbourne's emerging price growth leadership, potentially creates counter-cyclical opportunities for investors willing to move before broader market awareness catches up.
Building Costs Hit Record High
The cost of building a new house has reached a record high, with experts warning there's little prospect of prices easing in the near future. The average cost to build a new house has climbed to $504,109 as of March 2025, according to ABS building approvals data.
The cost of building a new house is at a record high
Total value of new houses approved compared to total number of new houses approved

This represents a 6.5% increase from a year earlier when the typical build cost $473,230, and a staggering 52.6% jump from March 2019's $330,430 figure. The dramatic rise began during the pandemic as lockdown-era construction stimulus collided with global inflation pressures, and costs show no sign of reverting to previous levels.
In Victoria, the cost pressures are particularly evident, with the latest ABS data showing Victoria's average house build now costs $517,000 — up from $484,000 a year ago and far above the $363,000 typical cost in March 2020, just before the pandemic.
Master Builders Australia chief economist Shane Garrett identified extended construction timeframes as a significant factor: "Time is money when it comes to home building, so the longer it takes to build, the more money you have tied up in it. People have to be paid by the hour when it comes to the construction business and when it gets stretched out over a considerably longer period, that also generates cost increases."
Garrett also warned that the construction workforce is insufficient to meet the federal government's target of 1.2 million new homes in five years while also completing ongoing infrastructure projects. This labour shortage is driving up wages as "workers go to the highest bidder."
Housing Industry Association senior economist Tom Devitt added that recent increases were largely attributable to labour costs amid historically low unemployment rates. "The shortage of skilled trades for construction sectors is particularly acute," he said, advocating for both increased domestic workforce development and skilled migration.
Despite the national target of 1.2 million new homes in five years, Devitt forecasts that Australia will struggle to deliver even one million in that timeframe. "It doesn't bode well for affordability, especially for home buyers," he concluded.
ANZ economist Madeline Dunk reinforced the supply-demand imbalance driving price growth: "If you look at dwelling stock on a per capita basis, what we tend to see is it's the places where population is growing faster than the dwelling stock – that's the places we're seeing strong price growth."
Satellite City Suburbs Experience Strong Growth
Property prices have surged dramatically in suburbs of satellite cities, with some recording more than 30% growth over the past year. This boom has been fuelled by buyers from capital cities seeking more affordable homes within commuting distance of major urban centres.
These satellite cities – smaller urban areas located within about an hour of Australia's capitals with populations of a few hundred thousand people – include Newcastle and Wollongong in NSW, the Gold Coast, Sunshine Coast and Toowoomba in Queensland, Geelong and Bendigo in Victoria, and Bunbury in Western Australia.
PropTrack data shows that affordability remains a key driver of price growth in these areas, with most top-growth suburbs having median prices lower than typical homes in their respective capital cities, even after substantial appreciation.
REA Group executive manager of economics Angus Moore explained: "Affordability is a big part of the drawcard, particularly in Sydney. We see a lot of people, particularly young families, moving from Sydney to places like the Central Coast to find more affordable housing."
While regional areas have outpaced capitals with 64% price growth compared to 43% in the combined capitals over the past five years, Moore noted that the trend has moderated somewhat recently. "The trends of people moving out of capitals into regional areas and satellite cities was especially strong during the pandemic. We're still seeing it, and it is a fairly consistent feature, but in many areas it's not as strong as what we saw during the pandemic."
Three Factors Set to Drive Further Price Growth
Despite Australian home prices already reaching record levels, REA Group senior economist Anne Flaherty identifies three key factors that could push values even higher throughout 2025:
- Falling Interest Rates: With a May rate cut virtually guaranteed following inflation landing within the RBA's target band, borrowing capacities will increase and mortgage repayments decline. "February's rate cut, as well as expectations that further cuts are on the cards, are supporting buyer sentiment," Flaherty noted. "Should interest rates fall in May, we may see the rate of price growth pick up again."
- First-Home Buyer Incentives: The expansion of the First Home Guarantee scheme from early next year, which will give an unlimited number of market entrants access to the government as guarantor, is expected to significantly boost demand.
- Persistent Housing Supply Shortage: Ongoing construction challenges and insufficient new housing approvals continue to create a substantial supply-demand imbalance across the country.
How far dwelling values rose in a decade, and what happened since peak
Change in dwelling values by location since their peaks, and over a decade

Flaherty also observed that price growth patterns are shifting across the country: "The rate of price growth is moderating in outperforming cities such as Perth, Adelaide and Brisbane, while underperformers such as Melbourne, Canberra and Sydney have started to pick up. This is lessening the divergence in home price growth seen across the country over the past year."
Strategic Implications for Property Investors
The current market environment presents several key strategic considerations for property investors:
- Melbourne's Value Proposition: With Melbourne prices now lower than Brisbane and Adelaide (and potentially Perth soon), investors should consider the relative value opportunity in Australia's second-largest city. Counter-cyclical opportunities may exist before broader investor interest returns.
- First-Mover Advantage: With another rate cut expected on May 20 and additional cuts forecast throughout 2025, acting before these monetary policy changes fully impact the market could secure better entry prices.
- Supply Constraints: The record-high cost of construction ($504,109 for an average house) and ongoing labour shortages mean new supply will remain limited, supporting prices in established areas with limited development potential.
Looking Ahead: Perfect Conditions for Strategic Investment
The Australian property market stands at a pivotal moment, with multiple factors aligning to create exceptionally favourable conditions for strategic investment. Melbourne's dramatic turnaround – now leading the nation in quarterly price growth – highlights how quickly market dynamics can shift when conditions align.
With auction clearance rates holding above 70% for the second consecutive week, buyer sentiment improving dramatically, and an imminent rate cut expected on May 20, the market is displaying clear signs of strengthening momentum. At the same time, supply constraints – evidenced by record building costs and insufficient construction activity – continue to support price growth across established areas.
For strategic investors, this confluence of factors presents rare opportunities in previously underperforming markets, particularly Melbourne where relative affordability compared to other capitals is driving renewed interest from both owner-occupiers and investors. Those who recognise these shifts and position themselves ahead of further rate cuts and policy changes stand to benefit most as these stimulatory factors flow through the market.
"The window between February's rate cut and the anticipated May decision has created perfect conditions for decisive investors. We're seeing many clients secure properties in growth corridors now, recognising that each rate reduction improves borrowing capacity across the market. When you combine this with Labor's demand-focused housing policies, historically low unemployment rates, and first-home buyers rushing to enter before the expanded guarantee scheme takes effect, the stage is set for significant price growth. With building costs at record highs limiting new supply, established properties in land-constrained areas look set for substantial appreciation throughout 2025," says Godfrey Dinh, CEO of Futurerent.
How Futurerent Can Help
Strategic investors are positioning themselves to capitalise on these shifting market dynamics. Moving quickly in the current environment requires both decisiveness and financial agility.
Futurerent enables property investors to:
- Access up to $100,000 per property (maximum $500,000 across your portfolio)
- Move swiftly to secure properties before competition intensifies following next week's anticipated rate cut
- Fund strategic renovations to maximise appeal
- Maintain financial flexibility while navigating evolving market conditions
Contact our team today to discuss how we can support your investment strategy and help you capitalise on emerging opportunities across Australia's evolving property market.