Data indicates that market expectations of potential interest rate cuts later this year influenced a 0.6% month-on-month increase in national house prices in February, representing the fastest growth rate in nearly five months.

House prices in Melbourne rebounded by 0.1% in February, ending a slump that lasted for nearly three months. Sydney also saw a 0.5% increase after declines in November and December.

The Perth property market continued to perform strongly with a 1.8% increase in house prices. Adelaide recorded a 1.1% increase, while Brisbane saw a 0.9% rise. Apart from a 0.3% decline in Hobart, all capital cities experienced price growth.

According to Tim Lawless, Research Director at CoreLogic, recent data from the past two months indicates that Australian house prices are likely to continue a moderate upward trajectory. He noted that enhanced market expectations of an imminent interest rate cut have boosted confidence in the real estate market.

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While interest rate cuts may be expected later this year, a sharp easing cycle is not anticipated. Significant rebound in house prices remains challenging due to ongoing housing affordability challenges, rising unemployment rates, and cautious lending conditions.

Pat Bustamante, Senior Economist at St George Bank, stated that despite relatively high interest rates, the improvement in the property market is sustainable. He pointed out that current residential price increases surpass the average levels from before the pandemic in February and believes the current improvement is sustainable.

Ben Horwood, a Sydney real estate broker, noted signs of buyers expressing concerns about missing market opportunities. He highlighted increasing buyer demand as they seek to purchase property quickly before interest rate cuts intensify market competition. Additionally, in February, the average clearance rate for auctions across Australia exceeded 65%, with Sydney maintaining a clearance rate of over 70%, and Melbourne rebounding to around 65%.

While housing supply is increasing, auction results remain strong, indicating an acceleration in house price increases in Sydney and Melbourne. However, Carlos Cacho, Chief Economist at Jarden, believes that if housing supply continues to increase at the current rate, the momentum of house price increases may slow down.