April 2025
Introduction
Australian Property Market Update.
With all the changes in the Australian property landscape, you may be wondering what is happening in our residential property market now that we have moved into the next stage of the housing market in Australia. The summary below is based on various property market research houses data gathered, indicating where the Australian Housing market might move towards.
If you would like some help on what you can do to take advantage by investing in the housing market, why not talk to my team at properT network, where you can share your investment objectives and our team and I can save you time, point you in the right direction so that you can make more money.
Australian Housing Market report 2025
Residential Property Values
Incoming data demonstrates the continued house value increase through March 2025, marking second consecutive month of growth following a previous short lived dip. Prices are now 3.91% higher than previous year, and up 48% over past 5 years.
Lower interest Rates and the Fear of missing out will attract buyers sooner rather than later.
Supply and Demand
Australia continues to face a significant and severe housing shortage, where demand continues to increase and the under-supply gap continues to widen. This will drive property prices and also rental yields higher.
New home construction at a decade low! Only 168,050 homes began construction in 2024. Well below the annual supply of 250,000 new dwellings needed. A far cry below governments 1.2m goal by 2029. Further exacerbating the gap between demand and supply.
Population Growth
Robust population and migration growth into Australia increasing demand for both Rental and Owner Occupied properties, this will drive both property prices and rentals higher. The demand for housing is already very high and the supply gap continues to widen. Both the need for houses and units have and will increase going forwards to meet strong population growth.
Interest Rate Outlook
RBA cut rates in Feb 2025 on the back of inflation easing. The market estimates two to three further market rate cuts during 2025 (August and November?), guesstimating between 0.5% to 0.75% further cuts. Once market sentiment and confidence returns, buyers and investors will enter the market enforce, creating competition which results in increased property prices.
Strategic investors do continue to invest in the property market, with investor finance being up 31% over last year.
Market Sentiment
Our economy will remain robust, employment figures will continue to rise; and on the back of further rate cuts being sprouted by the market, buyers to live and investors have and will continue to pick up their interest in buying something soon. The fear of missing out, combined with a massive shortage of property available (built and to be built), will drive market values higher.
Increasing Building Costs
Increasing build costs are supporting current housing stock pricing and values. Affordability is driving buyers to more affordable areas further out from where they live or to other regions in Australia. Buyers will try to enter the market sooner, creating competition for new entrants where developers will continue to take higher profits as demand versus supply widens.
Are you aware that building costs, since the Covid-19 pandemic, surged 30.8% higher? Building costs continue to rise with further escalations predicted through 2025. What this means to you is that waiting to see what happens, will guarantee you pay more for the same thing in the future.
Dire Shortage of Rental Property
On the back of increasing population, high and increasing demand for rental property and historically low supply, lack of affordability to purchase to live (or to purchase to invest), lower building approvals and more, the rental property market is under extreme pressure to supply new rentals. Yet investors are challenged to put another investment property on the market. This supply and demand equation will drive rental yields higher for investors entering this emerging market.
New Land Supply
Most local governments are under pressure to release new land. Land supply has decreased with land development approvals taking exceptionally longer to be approved, than developers have anticipated, budgeted and planned for. At the same time, more residents are moving to these areas unaware of on the ground supply issues. New Lot registrations are being pushed out further.
Land Developers are also placing restriction in certain land developments where Owner Occupiers have priority over investors, insisting a sale to an owner occupier. This will result in further low supply of rentals in these locations.
New Unit / Apartment developments
Developers of apartments and units are under massive pressure of land availability to suit development, high price of land per square meter, increasing building costs, slow build approval processes, obtaining necessary finance to be able to settle the land and undertake the build, fund the project incurring holding costs and more. This ‘perfect storm’ continues to ensure price per sq/m by purchaser continues to increase.
Resilient Market Drivers
The time to buy to Invest remains today. This ‘perfect storm’ described in the above summary is presenting well for Investors wanting both strong rental yields and capital growth opportunities.
Strong migration and immigration will continue to underpin and grow our housing markets, with each State enjoying it’s own micro property market and market influences differently to the next State.
In Summary : Rising Rents; Strong Investor Confidence; Favorable Demographics; Low Supply; Increasing Demand on back of population growth and migration, predicted Lower Interest Rates are all strong market indicators.
The market demand will increase on further Interest Rate Cuts, which will impact each State across Australia in a different way, where vacancy rates will continue to be at record low levels and rental growth will continue to grow at record highs.
The Australian housing market is so under supplied, unlike any other time in recent history, where supply and demand gap continues to widen, and will only get worse. Government promises to increase supply is failing, the market knew it was a false promise and continues to prove to be false.
Investor Confidence will continue to increase as further stars align for them in this current and future Residential Property Market space.
Falling interest rates are proven to establish a property market reset. Investor finance is already up 31% over 2024 and the market understands when Investors get it, the Owner Occupier knows it’s time to buy to live. A reset in the market drives up property prices and also rental yields.
What to Invest in?
What you should be investing in is highly dependent on what your investment strategy and budget is. At properT network, we follow a proven trend of matching the investment vehicle (the property), to your preferred outcome, the purpose of your investment and your budget. We also understand that only a small percentage of residential property is actually worthy of your investment dollars.
Our team will point you in a proven direction to meet your own goals head on, by introducing you to a selection of ‘best fit’ properties to meet your investment objective head on. Ask us the what and the where?
Some investors are wanting capital growth, some are focused on being cash flow positive through higher rental yields and others want a combination of both … what do YOU want?
CoreLogic article talking about home values recover to new record highs in March 2025
PropTrack Price Index article on national home prices in March
