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Property prices have gone up nationally for first time in 10 months, despite rising interest rates.
CoreLogic data shows the median value of properties sold across the country went up by 0.6 per cent in March.
Sydney's average property price is even up above $1,000,000-mark again.
The property data firm's analyst, Tim Lawless, said the reversal of the housing market's 10-month downturn would have been nearly unforeseeable just three to six months ago.
"It's come a lot earlier than expected," Mr Lawless told ABC News.
There is some divergence, however. The growth is coming from Australia's biggest capitals, while smaller markets — such as Darwin and Hobart — are still experiencing a downturn.
Mr Lawless said that, in Sydney, growth was being fuelled by the top end of the market, with cashed-up investors potentially getting back into the high-end market after a period of uncertainty.
Apartments and units, however, aren't selling for as much.
Mr Lawless said there were several factors that could be contributing to rising property prices.
The economist says the biggest factor is that the number of homes up for sale is still at below-average levels. This means buyers have less choice, which may keep prices stable.
"We are seeing very low supply and, even though demand has dropped as well, we've seen supply drop a lot further," he said.
He also says the housing market is getting over its interest rate shock.
The Reserve Bank of Australia has hiked the cash rate for 10 months in a row and it is sitting now at 3.6 per cent. That has been curtailing mortgage lending, leading to economic uncertainty.
Economists are divided on whether the central bank will hike the cash rate again at its meeting tomorrow, as early signs appear that consumer spending is slowing and inflation is easing.
"It's looking more and more like we're probably at the peak of the rate-hiking cycle, or nearly there," Mr Lawless said.
"For a lot of buyers and sellers, this will work towards improving the level of confidence in the marketplace and, maybe, start to see activity picking up a little bit, even offsetting the normal seasonal slump we see through winter."
Lastly, Mr Lawless also says that the return of migration — which is now back above pre-pandemic levels — is putting extra pressure on the already very tight rental market.
He assumes that is pushing some new migrants into buying a home straight away, if they can afford it.
CoreLogic's data has bad news for the one-in-three Australians who rent.
It shows the worst rental hikes nationally appear to be over, but that prices are still going up in key cities such as Sydney and Melbourne.
The highest spikes appear to be hitting big city apartments, with unit rents up 18.1 per cent in Sydney in the past year, 16.1 per cent in Brisbane, and 14.6 per cent in Melbourne.
Mr Lawless says one of the biggest influences on rising rents is a lack of availability.
This means renters have fewer choices about where to go, even when they're hit with a rental hike for their current lease.
"We saw the vacancy rate drop to a new record low in March, at just 0.9 per cent across the combined capital cities," Mr Lawless said.
"I think any tenant is probably looking to stay in their lease for longer rather than brave the very tight rental market conditions."
A federal body report also out on Monday reiterates that chronic rental shortages are expected to continue for years.
The report's release comes as the Labor government's Housing Future Fund to build new affordable properties remains stuck in limbo in the Senate,
Meanwhile, the National Housing Finance and Investment Corporation (NHFIC) estimates that, conservatively, around 331,000 households are already in rental stress, and around 46,500 households are experiencing homelessness.
It estimates that 190,000 more households will form between 2023 and 2033.
Its modelling shows that not enough properties will be built to catch up to this demand, with a deficit of around 106,300 dwellings, cumulative, expected over the five years to 2027.
“The rapid return of overseas migration — together with a supply pipeline constrained by decade-high construction costs and significant increases in interest rates — is exacerbating an already tight rental market," NHFIC chief executive Nathan Dal Bon says.
"NHFIC analysis shows housing affordability and supply are likely to remain challenging for some time, underscoring the need for a holistic approach to mitigate the housing pressures Australians are facing.”
The report also says that the availability of serviced land, higher construction costs, ongoing community opposition to development, and long lead times for delivering new supply are other factors hindering the development of new housing.
Meanwhile, the Reserve Bank of Australia (RBA) has also been arguing for a while that the change in how and where Australians decided to live during the pandemic was one reason why rents did not drop sharply in most areas.
That, it notes, is despite the surge of emigration early in the pandemic and population stagnation while borders were closed.
NHFIC's analysis agrees with this:
"The premium for space at home, with ongoing work from home arrangements following the pandemic, has contributed to reducing average household size. This has been a factor in sharply falling vacancy rates," the NHFIC notes.
Mr Lawless expects this trend towards bigger homes to reverse as the rental crunch continues. He suspects it may already be happening, as people simply having no other option but going into share houses or renting out spare rooms.
"There is some signs that rental growth is starting to ease off a little bit," Mr Lawless said.
"I think this probably reflects simply the fact that renters are approaching a ceiling and what they're willing or able to pay, rather than any rebalancing in the supply demand equation for rental markets."
Mr Lawless agrees with the NHFIC that more apartments need to be built.
He notes that, even Labor's Housing Future Fund will take years to ramp up to construction phase of social and affordable housing, if it passes the Senate.
"The reality is there's not a great deal of immediacy from any government initiatives at the moment for a problem that really needs a very immediate solution," Mr Lawless said.