It’s not official yet, but if you’ve been to an open home or auction recently, you’ll already know that buyers are starting to act like a rate cut is just around the corner.
That shift in sentiment is now being reflected in the numbers. Auction clearance rates nationally just jumped to their highest level in four weeks, hitting a preliminary 70.1%, according to CoreLogic.
Melbourne led the charge, with a 74.4% preliminary success rate, its strongest result in nearly two years. Sydney wasn’t far behind at 69.4%, while Canberra also posted a sharp rebound to 69.4%.
This bounce comes after a slow period for property. The initial confidence spike that followed February’s rate cut had started to fade. But with inflation softening and the odds of another cut increasing by the day, buyers are clearly returning and Melbourne is a standout example.
For a little while now, Melbourne has lagged behind the other capital cities. Clearance rates have been soft, and it’s only been certain pockets that have really been performing well. However, as rate cuts are beginning to become a reality, there is a growing push from buyers to start getting involved.
The rate cut everyone’s watching
The Reserve Bank’s next meeting on May 20 is front of mind for buyers and sellers alike. While no cut is guaranteed, a growing number of economists and banks are now pricing in at least one more reduction this year, possibly as early as this month. Inflation is tracking lower, unemployment is holding up, and the RBA has made it clear it won’t hesitate to move if conditions allow.
CBA, ANZ, and Westpac have all forecast easing to begin by mid-2025, with rate reductions of 50–75 basis points likely by the end of the year.
That’s welcome news for borrowers. Every 25-basis-point cut improves borrowing capacity by around 2.5%, and with housing supply still critically low, even small boosts in capacity can can see prices swing upward quickly.
Confidence is everything
More than interest rates and more than inflation, confidence is what drives market momentum. And right now, we’re seeing that confidence return.
It’s showing up in rising auction attendance, more bidders, stronger final sale prices, and vendors becoming more willing to list. The federal election result also helps. A decisive win means no minority government uncertainty, and buyers are likely going to respond accordingly.
The data is starting to match what agents on the ground have been feeling for weeks.
Melbourne looking good
While Brisbane, Adelaide and Perth have dominated headlines over the past 12–18 months, Melbourne might be the comeback story of 2025. Values are still below peak in many suburbs, clearance rates have room to rise, and buyer demand is building at just the right time. Compared to Sydney, affordability in Melbourne remains attractive, especially for families looking for space close to the CBD.
From an investor’s perspective, yields have also improved thanks to rental growth and softer prices over recent years. As vacancy rates remain low and population growth stays strong, Melbourne’s fundamentals are beginning to look appealing.
Don’t expect a boom
I’m not predicting runaway growth, but the ingredients for a steady upward move are falling into place thanks to the improving sentiment, rising clearance rates, low supply, and the likelihood of further rate cuts ahead.
But it is important to understand that this isn’t 2021. Buyers are more cautious, and finance is still tight. But for those with a medium- to long-term outlook, this could be a great buying window.
As always, the best opportunities are found when confidence is starting to rise but before the data fully catches up. We’re in that moment now, especially in markets offering value like Melbourne where there’s still time to move before momentum really builds. But I wouldn’t wait too long.