Australia’s housing market is showing clear signs of renewed momentum, according to Westpac’s latest Housing Pulse.
“Buyers are perking up, price growth has lifted, auction clearance rates are rising, and supply is tightening,” said Matthew Hassan (pictured), head of Australian macro-forecasting at Westpac. “Current signals suggest we are heading for a very interesting spring selling season.”
Rising dwelling prices are also feeding into broader inflation risks. Westpac recently lifted its trimmed mean CPI forecast for the September quarter, citing increased risk from housing costs.
Housing sentiment has turned sharply, with Westpac’s “time to buy a dwelling” index surging 10% in August, buoyed by RBA’s third rate cut and expectations of further easing.
RBA lowered the cash rate to 3.6% in August, citing moderating inflationary pressures and a tight labour market, though RBA governor Michele Bullock has signalled that future moves will depend on how consumer spending and inflation evolve.
“It’s not quite ‘all systems go’ – consumer risk aversion is still elevated – but there is enough to suggest turnover will see a decisive rise into year-end, potentially in the 10-15% range,” Hassan said.
Auction clearance rates are now around 70% in Sydney and Melbourne, and national price growth has ticked up to a 0.6-0.8% monthly pace.
“Buyers are often quicker to respond to changes than sellers,” Hassan said, with listings at a 15-year-low and monthly new listings lagging sales by about 7,500.
“If demand rises 10-15% from here, sparks may fly.”
Westpac has revised up its price forecasts, now expecting a 6% gain for 2025 and a further 9% rise in 2026.
“A remarkable 70% of consumers expect prices to rise over the next year, up from 64% in May and 55% in February,” Hassan said.
However, the Westpac economist cautioned that supply remains tight and affordability stretched, with completions not expected to lift meaningfully until late 2026.
Brisbane and Perth are seeing the strongest price gains, while Melbourne lags.
“All major capital city markets have seen positive gains over the last three months, ranging from 1% in Melbourne to 3.1% in Perth,” Hassan said. “Rental vacancy rates remain low, and risk aversion is still above average, but the Spring auction season will be a key test of market depth.
Westpac’s report signals a tightening market, with buyers returning and prices rising, but warns that affordability, supply constraints, and renewed inflation risks will shape the months ahead.
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