Market Update May 25 – Darwin Powers On, Melbourne Recovery Continues, All Capitals Rising, Listings & Investor Trends Signal Shift (Ep.314)

Market Overview: May 2025 Snapshot

Darwin Leads the Way

Darwin posted the strongest growth in May according to Cotality, rising 1.6% month-on-month. PropTrack, however, reported a more modest increase of 0.3%, highlighting discrepancies in data sources.

Supply is tightening rapidly in Darwin, with listings older than 180 days down 46% compared to last year. Investors appear to be buying up nearly everything on the market — including properties that had previously struggled to sell.

Rental prices are also climbing, despite Darwin already offering the highest rental yield of any capital city at 6.6%. This points to strong demand from both investors and tenants.

All signs suggest Darwin is already running hot, even though it’s still early in its current price cycle. We continue to expect double-digit growth, potentially exceeding 20%. That said, Darwin remains a high-risk, low-volume market — dwelling values are still below their 2014 peak, though that may not remain the case for much longer.

Source: Cotality

Melbourne Showing Signs of Recovery

Melbourne led all capitals in May according to PropTrack, with prices rising 0.8%.

While values remain 4.5% below their previous peak, buyer confidence and activity on the ground are clearly improving.

It’s worth noting that most price indexes lag behind real-time conditions, as they rely on settlement data, which can take weeks or even months to be captured fully by property data providers.

Source: PropTrack

Adelaide Strong but Possibly Cooling

Adelaide recorded 11% annual growth in May according to PropTrack,  the highest of any capital over the past 12 months. Median house prices reached $882,000.

However, a 16.5% rise in old listings during May may be an early indicator of demand softening.

Our team, along with local expert Peter “The Property Professor” Koulizos, notes that recent growth may be running ahead of Adelaide’s economic fundamentals.

Investors should remember that most markets tend to overshoot on the way up, often followed by a correction phase.

Brisbane Joins the $1M Club

Brisbane’s median house price has now surpassed $1 million, joining Sydney in that exclusive category.

Growth momentum has picked up since February, rising from 0.2% to 0.6% in May according to Cotality. This could be the beginning of a “second wind”, though whether it’s sustainable remains to be seen.

Sydney Edging Back to Peak Levels

Sydney is now just 0.3% below its September 2024 peak.

While its growth has been less dramatic than some other markets, it remains consistent, recording a 0.5% gain in May according to Cotality. Balanced demand continues to support its steady recovery.

Source: Cotality

Canberra Faces Headwinds

A 58% increase in old listings over the past year points to a buildup of unsold stock and softer buyer activity in Canberra.

Will conditions improve now that the federal election is behind us, restoring stability in a city where two out of three people work in the public sector?

Despite its weaker outlook, Canberra still managed modest growth of 0.4% in both April and May, according to Cotality, further evidence of the market-wide impact of falling interest rates.

Hobart Still Has Room to Run

Hobart remains the furthest below its previous market peak, with values still down 10.5% since May 2022.

Rental demand has been patchy, especially for units, which saw a 5.7% drop over the four weeks to 28 May according to SQM Research.

A slight decline in distressed listings and other indicators may suggest the market is bottoming out, though Hobart’s data should be interpreted cautiously due to its smaller population and lower sales volume.

Perth Growth May Be Peaking

Perth recorded 0.7% growth in May, up from 0.4% in April and 0.2% in March, according to Cotality, the second-highest increase among all capitals.

It was also the only capital to record a rise in new listings, up 11%, as more vendors appear to be cashing in.

This could signal that the market is starting to mature.

The question now is whether falling interest rates will give Perth, Brisbane, and Adelaide a second wind, all of which have shot the lights out over the past two to three years.

Investor Activity Strengthens

Investor lending rose 8.8% year-on-year, outpacing demand from first-home buyers and upgraders.

Lower interest rates are drawing investors back into previously underperforming markets like Darwin and Melbourne — both of which also offer historically strong rental yields.

There’s also a sense of urgency among investors to act before the government introduces enhanced incentives for first-home buyers in 2026. Announcing major policy changes well in advance often has unintended consequences: savvy investors move early, and we’re already seeing this dynamic play out.

Source: ABS