It's the highest quarterly increase since the three months to May 2024, with the annual growth rate of 4.8% marking the fourth consecutive month of rises.
The latest Cotality data reveals the total value of Australia's residential housing stock also hit a new milestone, climbing to $11.8 trillion for the first time.
That represents a jump of $678 billion over the past 12 months.
Cotality's head of Australian research Eliza Owen said if the property market continues at its current rate, it's possible the combined market value of all homes could hit $12 trillion by the end of the year.
Rebound in the Top End
Ms Owen attributes growth in some markets to the three interest rate cuts beginning in February, with Darwin setting the pace with prices rising 13.4% in 2025 so far.
Darwin suburbs such as Wanguri and Durack have seen more than 20% price growth in just the past eight months since the first cash rate cut.
The Darwin surge reflects a "powerful" combination of relative affordability, extremely low levels of housing supply, and a notable lift in investor activity, Ms Owen said.
This rise coincided with the introduction of the $50,000 first home owner grant - the most generous in the nation - and the median property value has increased by more than $50,000 since the policy was introduced in October 2024.
It's also the second-most expensive city to rent a house behind Sydney, and has the lowest rental vacancy rate at less than 1% - considered severely tight.
Not all markets supercharged
Conversely, Sydney and Melbourne accounted for most of the suburbs that have seen a dip in value since interest rate cuts began.
The biggest declines were concentrated in inner-city, lifestyle suburbs, mostly with high-density unit stock.
Milsons Point in Sydney saw the greatest drop in values, down 7.1%, followed by Kirribilli with a 6.3% fall.
Mid-sized capitals continue to grow
Outside of Darwin, where quarterly values rose 5.9%, the so-called mid-sized capital cities also continued to see growth.
Perth home values were up 4%, Brisbane saw a 3.5% rise, and Adelaide rose 2.5% - all outstripping the national quarterly figure.
Western Australia, Queensland, South Australia also continued to lead annual growth rates in regional home values.
Among the other capital cities, rises in home values were more modest, falling below the quarterly national average.
Sydney saw a 2.1% rise, Canberra's was 1.7%, Melbourne 1%, while Hobart nudged only 0.1% higher.
Lower end of the market leads growth
Nationally, the strongest quarterly pace of growth rippled from the lower quartile of the housing market (up 2.4%) to the broad middle (up 2.5%).
The 'middle' is defined as dwellings valued between $648,000 and $1.2 million.
It shows the bottom end of the market was heating up before the expanded Australian Government 5% Deposit Scheme took effect from 1 October.
The data revealed discounts offered by sellers are generally smaller than they were a year ago amid rising buyer activity and low housing stock.
Nationally, stocks levels have moved subtly higher over the past four weeks with the total listing levels rising 2.7% since the start of the spring selling season.
However, the housing market remains tightly held, with listings still sitting 19.3% below the historic five-year average for this time of year.
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