The median dwelling in Australia was worth $831,288 in May - a 0.5 per cent jump on the month before - data released by property analytics firm Cotality, formerly CoreLogic, on Monday showed.
Every capital city, as well as the combined regions, exhibited growth of 0.4 per cent or more, in a broad-based recovery largely down to buyers feeling better about their purchasing capacity.
"Undoubtedly, interest rates have had a positive flow through to housing markets since February," said Cotality research director Tim Lawless.
"But I certainly wouldn't call the rate of growth shooting the lights out. A 0.4 per cent to 0.5 per cent growth rate is much more sustainable than what we were seeing, say, in early 2023 up to mid-2024."
The trend was echoed in the PropTrack Home Price Index report, also published on Monday, produced by REA Group.
REA Group senior economist Eleanor Creagh said the trend was expected to continue due to a chronic lack of new housing supply, population growth and targeted buyer incentives.
"In combination with interest rates continuing to move lower, these factors are likely to drive further growth throughout the remainder of 2025," she said.
After a shallow and short-lived downturn at the end of 2024, the recovery in prices had more to do with sentiment than a genuine improvement in serviceability or access to credit, considering interest rates were still in restrictive territory, Mr Lawless said.
"And we know from historical correlations, consumer confidence and housing activity tend to go hand-in-hand."
Changes in property values have converged across markets after record divergences in price growth in 2024.
In August, there was a 26.1-percentage point difference between the annual growth rate in Perth (24.5 per cent) and Hobart (-1.6 per cent).
Price rises have slowed in the Western Australian capital, but properties there still increased at 0.7 per cent in May, behind only Darwin, which grew at 1.6 per cent.
While 2024's astronomical growth rate of 19 per cent was unlikely to be repeated, Perth's low price base, strong economy, high interstate migration numbers and low property listings would continue to lift values higher, Mr Lawless said.
Since 2020, house prices in regional areas have grown 65.7 per cent while capital cities have increased by 44.8 per cent over the same period, the PropTrack report revealed.
Nationally, rents grew at 0.4 per cent in May following three straight months of 0.6 per cent gains, according to Cotality.
On an annual basis, rental growth is trending downwards, with the largest markets of Sydney and Melbourne showing the softest results.
Capital city vacancy rates remain below the long-term average at two per cent, boosting prices.
Net overseas migration is falling back to normal levels after the post-COVID spike, and increasing household sizes were keeping a lid on demand.
But slow progress on the supply side of the ledger doesn't look like improving soon.
Dwelling approvals fell 5.7 per cent in April, the Australian Bureau of Statistics reported on Friday, putting the national target of 1.2 million new homes over five years further out of reach.
"Rental affordability challenges are going to be with us for some time yet, given tight rental conditions," Mr Lawless said.
Following the Reserve Bank's decision to cut interest rates by 25 basis points at its May meeting, Governor Michele Bullock said it was not the RBA's responsibility to address housing affordability through monetary policy.
Governments, she said, held the levers to fix the imbalance of supply and demand.
"There's nothing the Reserve Bank can do about these affordability issues of housing," she said.
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