S&P/ASX 200 Index (ASX: XJO) shares vastly outperformed investment property last month, rising 4.57%.

This was the largest monthly increase since December 2023.

The benchmark index capped off the month with a new record high of 8,566.9 points on 31 January.

Meantime, the median national property value fell for a second consecutive month as the market continued to cool.

Data from CoreLogic showed a 0.03% fall in January, which followed a 0.1% fall in December — the first fall in almost two years.

Prices are softening due to an increased supply of homes for sale, affordability constraints, and continuing limited borrowing capacity due to higher interest rates.

Will an interest rate cut arrest the downturn?

Many analysts expect an interest rate cut in Australia this month, and CoreLogic's research director, Tim Lawless, said this may contribute to a shallow downturn in home values in the first half of 2025.

Lawless said:

Lower mortgage rates and a subsequent lift in borrowing capacity as well as an under supply of newly built housing could be setting the foundations for a relatively shallow housing downturn.

But the easing cycle for interest rates is likely to be a gradual one, and we also have the ongoing headwinds of affordability constraints, normalising population growth and generally soft economic conditions to contend with.  

All things considered, the likelihood of a significant growth cycle over the coming year remains low.

McGrath Estate Agents CEO John McGrath said the first rate cut will be "very important for buyer morale".

McGrath told The Real Estate Conversation:

The first cut will signal the beginning of a series of rate reductions, which should spur on buyers.

We will likely see a spike in buyer activity with the first cut, and a more meaningful increase once we've seen three or four rate cuts. 

The Reserve Bank will announce its next decision on interest rates on 18 February.

Let's dig into the January numbers for ASX shares vs. property.

Shares vs. property: What happened in the first month of 2025?

Dwelling values (incorporating all types of properties) continued to rise in the booming cities of Perth, Adelaide, and Brisbane, albeit at a moderated pace.

Perth, Adelaide, and Brisbane recorded median home price gains of 0.4%, 0.7%, and 0.3%, respectively.

Home values fell by 0.4% in Sydney, 0.6% in Melbourne, and 0.5% in Canberra.

Shares vs. property: Here are the numbers for January

Top 5 risers of the ASX 200 last month

Here are the five biggest ASX 200 risers of the month, according to S&P Global Market Intelligence.

Why did the Boss Energy share price leap 36%?

ASX 200 uranium share Boss Energy rose by 36.2% last month.

Early in the month, ASX uranium stocks lifted as major global companies pursued nuclear deals to power their artificial intelligence capabilities and data centres.

News of impending global supply limitations further buoyed uranium stocks.

Then, on 29 January, Boss Energy released a strong quarterly update that led to a 16.5% spike in the share price over the final three trading days of the month.

Boss Energy is the most shorted stock on the ASX due to traders' concerns over the company's costs.

My colleague James Mickelboro suggested the quarterly report may have eased their concerns and prompted some short sellers to buy Boss Energy shares to close their positions.

For the three months ended 31 December, Boss Energy reported a 96% increase in production at its Honeymoon project and said it remains on track to meet its FY25 production guidance.

Boss Energy also released its maiden cost guidance for Honeymoon.

C1 costs for 2H FY25 are expected to be A$37 to A$41 per pound (US$23 to US$25 per pound).

The company also said its 30% owned Alta Mesa project in Texas is expected to reach full operational capacity by 2026.