Home prices across the country have risen as interest rate cuts this year start to take effect, with more expected.
Nationally, home prices rose by 0.5 per cent in May, contributing to a 1.67 per cent price rise since the beginning of the year.
The figures, released by property data company Cotality, show what can happen from one rate cut, according to the firm's head of research, Tim Lawless.
The Reserve Bank of Australia has made two rate cuts this year in February and May.
The May house prices reflect the February rate cut, according to Mr Lawless, with the May rate cut - and likely further cuts this year - just starting to impact the housing market.
"We're expecting to see the May rate cut flow through in the June data and through the rest of the year if we see further rate cuts, which is highly likely," Mr Lawless said.
Where is the growth happening
Price rises were broad-based, with every capital city posting a rise of 0.5 per cent over the month of May.
The combined regional markets across the country also grew in May by 0.4 per cent.
And while that put regional monthly price movements behind capital cities in May, overall this year there has been stronger growth in regional Australia.
"The quarterly trend for regional property is still much stronger than the capitals and the annual trend as well," Mr Lawless said.
He said what had shifted is where the growth in regional markets had come from.
While regional centres closer to capital cities had boomed during COVID, now it had moved on.
"The top 12 growth markets are all what you'd loosely describe as rural regional markets," Mr Lawless said.
"They're more about regional economies that are strong and offering up very affordable housing opportunities."
City performers
Melbourne, which has suffered price drops over recent years, is showing signs of a comeback and attracting investors.
Prices grew by 0.4 per cent in May, with the median home value now sitting at $791,303.
"Melbourne has now moved through its fourth month of consistent gains and broken a 10-month slump in housing values.
"Even though values are 4.5 per cent below their all-time high, which was back in March 22, it's pretty clear this market is now in recovery mode."
He said that investors were now understood to be looking at Melbourne again.
"I think a lot more investors are picking up Melbourne on their radar as a good opportunity for medium-term capital gains."
Rich pickings in Sydney
The country's most expensive Sydney, held onto that title with a 0.5 per cent gain in prices in May bringing the city's median dwelling price to $1.203 million.
"The fact that values are still rising basically on par with the national average is surprising in itself given how expensive this market is and how unaffordable housing is," Mr Lawless said.
It is the most expensive homes that are seeing the biggest rises in Sydney, different from most other capital cities.
Homes that were $1.802 million and above, in the top 25 per cent of homes price wise, have outperformed lower priced homes.
"Sydney is the one market where we're seeing the upper quartile showing a slightly stronger performance than the lower quartile," Mr Lawless said.
"So it does look like lower interest rates, as we've seen through previous rate cutting cycles, seem to be influencing the more expensive end of the marketplace than the lower end."
He said this has likely occurred as interest rate cuts have a much higher effect on higher-priced homes and home loans.
