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Five years on from the pandemic’s outbreak, housing values look to be stabilising after years of rapid growth, CoreLogic research has shown.
The Australian property market has entered into a new phase, with housing values levelling off after rising by almost 40 per cent in the last five years, according to property analytics company CoreLogic.
CoreLogic’s latest Property Pulse (March 2025) has revealed relatively flat home values over the past four months as the market adjusts to normalising population growth, affordability challenges and what is expected to be a gradual rate-cutting cycle.
The national home value index edged lower by a cumulative 0.4 per cent between November 2024 and January 2025 before rising 0.3 per cent in February.
The slowing contrasts with a period of rapid price growth across Australia since the COVID-19 pandemic – with a cumulative 38.4 per cent surge in values since the pandemic was declared five years ago.
Over that time, around $227,000 was added to dwelling values.
CoreLogic executive research director Tim Lawless noted that the data for February showed the strongest monthly gains were in Melbourne and Hobart, with a 0.4 per cent rise.
“These are also two cities where housing values have recorded more material declines from their respective highs, with Hobart values 11.9 per cent below peak levels in February 2025 and Melbourne values down 6.4 per cent,” Lawless said.
“The silver lining to this weakness has been an improvement in housing affordability that should help to support housing demand going forward.”
Speaking at an event organised by Bluestone earlier this week, Lawless predicted that the Melbourne housing market could be set for a recovery after a period of softer growth compared to other capitals.
“We are seeing higher levels of first home buyers in Melbourne … There’s some potential for upward growth there,” Lawless said.
He added that subdued growth in property prices and the “sheer affordability” of housing had potentially set the Melbourne market up for growth.
Affordability squeeze continues
While the surge in housing values over the past five years has benefited home owners, affordability has become a greater problem for those looking to buy property.
By September of last year, each of CoreLogic’s housing affordability metrics was either at or equal with record highs.
Lawless noted that affordability concerns were widespread.
“Australian wages have risen by less than half the increase of housing since the onset of COVID, leading to widespread affordability challenges in most areas,” he said.
Combined with that is supply-side tightness, with the government falling behind construction targets and sluggish growth in new approvals.
Speaking at Bluestone’s event this week, Lawless said: “My view is affordability is going to be a key barrier [to] further growth, especially in markets like Sydney but also in markets like Adelaide.
“[The] growth rate [there] has been extreme, but it’s also come on the back of household incomes nowhere near keeping pace with that level of growth. So Adelaide, even though it’s got a median value that’s way lower than cities just for local income to that market, is looking extraordinarily unaffordable.”
Housing affordability challenges could also benefit regional markets, Lawless added.
The top regional growth markets over the most recent growth phase have been more diverse, featuring more rural Queensland markets as well as coastal markets of Western Australia.
“The stronger growth conditions in these areas may reflect affordability challenges becoming more apparent across many of the commutable lifestyle markets, as well as changed demographic patterns as more workers returned to an office location,” Lawless said.
Affordability pressures, particularly in urban areas, could also lead to unit prices rising higher, in relative terms, compared to houses.
“The convergence, or even outperformance, of units relative to houses in some cities, comes as affordability pressures deflect more demand towards the multi-unit sector, but also as a burgeoning undersupply of newly built multi-unit dwellings apparent,” Lawless said.
Looking ahead, Lawless declared in a speech this week that politicians will wade into more property policy commitments as an election looms.
“You would have to think that housing affordability and housing supply are going to be very high on the political agendas for both of the major political parties and the smaller parties as well. So watch this space ... I think you’re going to see a lot more announcements around housing policy, particularly, or hopefully supply-related [policies].”
[Related: New home builds rise, but housing target remains elusive]
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