Formerly the “Property Planner, Buyer and Professor” podcast
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February is always an interesting month in the property market. With Christmas behind us and the auction season kicking off, it can be hard to tell if early price movements reflect genuine momentum or just a seasonal bounce.
In this episode, Dave and Cate break down the latest market data, discussing whether Melbourne’s recent surge is a true turnaround or just pent-up demand after the holiday break.
With investor lending, vacancy rates, consumer sentiment, and economic uncertainty all shifting, they dive deep into what’s really happening and what it all means for home buyers and investors.
Melbourne Leads Capital Growth – A Turning Point?
- Melbourne recorded the strongest capital growth among major cities in February: +0.67% (PropTrack) & +0.4% (CoreLogic)
- Is this just a February surge, or the start of a sustained recovery?
- Sydney, Brisbane, and Adelaide also saw moderate growth, while Perth flattened out after years of strong gains.
- Cate explains why February can distort market trends, as buyer activity spikes after the Christmas lull.
- Will Melbourne’s momentum continue, or will this be a short-lived bump?
Source: PropTrack
High-End Homes Making a Comeback
- Sydney and Melbourne’s upper quartile properties led the recovery in February.
- This trend is not surprising—the most expensive homes fell the hardest during the downturn and are now bouncing back.
- Historically, the top end of the market reacts first to interest rate changes.
- Dave and Cate discuss whether this is sentiment-driven or a sign of deeper market shifts.
Source: CoreLogic
Capital Cities vs. Regional Markets – The Tides May Be Turning
Over the past decade, regional markets outperformed capital cities, but that trend may be shifting.
Sydney and Melbourne’s recent price growth suggests capital cities could reclaim the lead in 2025.
Listings are rising in Melbourne and Sydney:
- Sydney: +10.5% YoY
- Melbourne: +5.5% YoY
Despite the increase in listings, demand remains strong, keeping prices stable.
Are we entering a new phase where capital cities dominate once again?
Source: CoreLogic
Rental Growth Moderating – But Not Everywhere
- Rents have broadly stabilised, but Darwin remains an outlier, with wild fluctuations since COVID.
- Cate highlights a fascinating pattern—rental growth seems to directly correlate with how much politicians talk about a ‘rental crisis’.
- Darwin’s rental market is still unpredictable, with huge spikes during COVID now unwinding.
- Why has rental growth slowed?
- Household formation rates have increased (more people living together).
- Overseas migration has normalised, easing rental demand.
- Dave reminds us that rents barely moved for a decade before COVID—are we just seeing a market correction?
Source: CoreLogic
Investor Lending – Seasonal Dip or Market Shift?
- Investor lending fell 4.5% in Q4 2024 but is still 13.2% higher year-on-year.
- Some markets—like Perth, Adelaide, and Brisbane—may have peaked, leading investors to become more selective.
- Cate and Dave explore whether this is just seasonal caution over Christmas or a real shift in investor confidence.
Source: CoreLogic / ABS
Vacancy Rates Ticking Up – A Sign of Change?
Sydney and Melbourne saw small increases in vacancy rates, but levels remain historically low:
- Sydney: 1.1% → 1.5%
- Melbourne: 1.0% → 1.8%
Vacancy rates still sit well below the 3% level that signals market balance.
The rental market isn’t crashing—but it’s no longer as fiercely competitive as it was in 2023.
Source: SQM Research
Distressed Listings Are Rising in Victoria
Victoria leads the nation in distressed listings, up 18.2% YoY.
Tasmania and South Australia have also seen increases.
Dave and Cate discuss why Victoria is struggling:
- Higher land taxes
- More businesses failing
- A weak economy compared to other states
Still, distressed listings remain a small proportion of total sales, so it’s not a crisis—yet.
Source: SQM Research
Consumer Sentiment on the Rise – What’s Driving It?
- The “Time to Buy a Dwelling” index rose 4.3% in February, up 17.8% over the past 12 months.
- Victoria has surged into positive territory (106), meaning more buyers now believe it’s a good time to purchase.
- Meanwhile, Western Australia’s sentiment dropped, suggesting the state’s boom may be cooling off.
- Is this just a reflection of rate cut expectations, or are buyers truly ready to jump back in?
Source: Westpac-Melbourne Institute
Economic Uncertainty – Global Risks & Interest Rates
- Global uncertainty is growing, with concerns about:
- U.S. tariff threats
- Geopolitical risks
- Inflation pressures
- Bond markets predict further interest rate cuts, but the path ahead isn’t guaranteed.
- If inflation remains sticky, could interest rates stay higher for longer?
Where Is the Market Heading Next?
- With Melbourne and Sydney showing early signs of renewed strength, could 2025 be the year capital cities take control?
- Dave and Cate weigh up the risks and opportunities, discussing:
- Will investor confidence keep rising?
- Are we at the start of a market recovery, or is this just a seasonal blip?
- How will global events shape the Australian market?
Resources
The Property Planner’s Monthly Market Update
And if you’ve enjoyed this show, take a listen to these eps:
- 19 TIME IN the market v TIMING the market
- 21 Why price point should determine location and strategy
- 129 What is contrarian investing and how can you make it work for you?
- 158 How interest rate cycles have impacted the property market since 1990 when the RBA first started targeting the cash rate and some predictions on what will happen this time
- 164 Analysing regional locations – What investment principles can be gleaned from the highest performing regions in each state? Comparing capital city vs regional performance from 2003 – before and after covid
