2025 Q3 Wrap Up

Greetings from Scoutable and welcome to our Quarterly Wrap Up.

I hope you are well.

Cash Rate 
 
At its September meeting, the Reserve Bank of Australia (RBA) left the cash rate at 3.6%, after dropping rates by 25 basis points (3.85% to 3.6%) at its August meeting, which was the third time rates were lowered this year. The commentary out of the media release by the RBA was that while Australia’s economy is recovering the cash rate remains unchanged as the Board monitors domestic and global uncertainties.

First Home Buyer Scheme (now called Australian Government 5% Deposit Scheme)

Changes to Australia's First Home Buyer Scheme came into effect on 1st October. Key Changes include: -
- Income limits removed – all first home buyers eligible regardless of income
- No cap on participants – anyone meeting criteria can apply
- Government acts as guarantor for 15% of the loan, allowing buyers to avoid Lenders Mortgage Insurance (LMI) with just a 5% deposit
-  Cotality reported as at the end of September, 49.9% of Australian suburbs had a median house value at or under the new price caps, while 93.2% of suburbs had a median unit value at or under the new price caps.
- Property price caps increased (see table below).

The benefit of this scheme is allowing buyers to enter the market sooner with a smaller deposit and avoid LMI. The risk is negative equity if prices fall, higher interest over life of loan, potential impact on property prices (government predicts +0.5% over 6 years; some analysts suggest up to +10% in first year). How impacted the market is will also be determined by the uptake of first home buyers who can afford / service the 95% loans and are willing to buy at the price level of the new caps. The table below shows the weekly mortgage repayments for the new cap levels in the different capital cities. 

More information on the Scheme here

Market Update

Please find summary below of Cotality Home Value Index (HVI), released October 1st. 

National Housing Market Performance

  • The Cotality (formerly CoreLogic) Home Value Index (HVI) recorded a monthly increase of 0.8% in September 2025.

  • This marks the strongest monthly gain for national dwellings since October 2023.

  • Quarterly growth: National values lifted 2.2% in Q3, double the March quarter growth.

  • Median dwelling value is now $857,280.

Capital City Highlights

  • Broad-based gains: All capital cities and regions recorded value increases over the month, quarter, and year.

  • Darwin, Perth & Brisbane leading the quarterly growth chart (5.9%, 4.0% & 3.5% respectively)

  • Hobart & Melbourne: More sluggish, recording quarterly growth rates of 0.1% and 1% respectively.

Rental Market Insights

  • National rental index rose 0.5% in September, with the quarterly change coming in at 1.4%, highest since June last year

  • Darwin reporting the highest quarterly rental growth (2.9%) and Adelaide the lowest (0.4%)

  • National vacancy rate a new record low at 1.4%, with only 1.1% of Australian units and 1.7% of houses estimated to be vacant and available in September

  • Properties listed for rent nationally was tracking around 25% below the previous five-year average (over the four weeks to 28th September)

  • Gross rental yields easing due to home values rising at a faster pace than rents, resulting in the nationally gross yield reducing a little to 3.65% (lowest since Nov 2024)

Market Drivers, Risks & Outlook

  • Low supply: Listings well below average (e.g. -53% in Darwin, -45% in Perth, -31% in Brisbane).

  • High demand: Sales activity 7.3% above five-year average.

  • Interest rate cuts: Borrowing capacity up 7% since February due to 75bp cash rate cuts (based on median household income)

  • Sentiment lift: Monthly consumer sentiment index from Westpac and the Melbourne Institute is 12.8% higher than a year ago

  • Labour market: Unemployment steady at 4.2%; underemployment at its lowest since 1991

  • Affordability constraints: Dwelling value-to-income ratio near record highs (national 7.9, Sydney 9.6).

  • First home buyer pressure: New Home Deposit Guarantee expanding demand, but limited supply may push prices higher than the caps.

  • Low advertised stock levels and higher buyer demand will likely result in decent selling conditions, with values expected to rise over Q4, though growth capped by affordability challenges. Demand is supported by lower interest rates, rising real income growth, tight labour markets and a gradual rise in sentiment

Lastly, we recently had a chat about the market with our good friends at Pure Finance. If you'd like to have a read click here.

If you would like to discuss the property market further, please get in touch.

Until next quarter,

Kellie Landrey | Principal Buyers Agent