- Housing shortage (Source: Joseph Ballota)
Australia experienced a housing shortage of 62,000 homes in the 2024 financial year, an improvement from the previous year but still insufficient. The improvement was due to slower population growth rather than increased construction. Dwelling approvals remain weak, leading to ongoing housing undersupply in many regions. This housing crisis is driving up property prices and rents, particularly in supply-strained markets like Western Australia and Queensland. Factors contributing to the shortage include not enough approvals, labor and material shortages, demolitions, and high interest rates. For investors, this presents both challenges and opportunities, as they can benefit from strong rental returns and capital growth in undersupplied markets. However, affordability concerns may limit some buyers, and developers face challenges in completing projects due to cost pressures and slow approvals.
- Outer suburban housing markets (Source: Sebastian Holloman)
Outer suburban housing markets in Sydney and Melbourne have experienced stronger annual price growth than their inner-city counterparts due to worsening affordability. The top 20 suburbs for annual growth in both cities are located at least 20 kilometers from their central business districts. This trend is driven by buyers seeking more affordable options due to tighter borrowing capacity and higher mortgage costs. In Sydney, the suburb of Austral in Liverpool saw the highest annual growth of 15.6%, while in Melbourne, Eumemmerring in the Casey LGA recorded the highest growth of 6.2%. Despite broader market softness in Melbourne, 38% of suburbs located 20 kilometers or further from the city’s CBD still experienced value growth.
- QLD’s rental market (Source: REIQ)
The Real Estate Institute of Queensland (REIQ) reported that vacancy rates in Queensland have remained critically low, with 24 out of 50 local government areas (LGAs) and subregions experiencing tightening vacancy rates in the March 2025 quarter. The statewide vacancy rate dropped from 1.0% to 0.9%, with 38 out of 50 LGAs and subregions posting tight vacancy rates of 1.0% or less. REIQ CEO Antonia Mercorella attributed the tight rental market to unfavorable investment conditions and a structural undersupply of housing in Queensland.
- Rental vacancy rates (Source: SQM Research)
The April 2025 data from SQM Research reveals a national rental vacancy rate increase to 1.3%, up from 1.1% in March 2025 and 1.1% in April 2024. Melbourne and Sydney experienced the most significant vacancy rate rises, with Melbourne recording the highest vacancy rate at 1.8% and Sydney at 1.5%. Advertised rents showed varied trends across the nation, with some cities, like Sydney and Melbourne, experiencing softening rental prices. The national average weekly rent was $650, down 0.7% over the past month, and up 3.9% year-on-year. Louis Christopher, Managing Director of SQM Research, commented on the shift towards a slightly eased rental market, particularly in Melbourne and Sydney, but noted that tight markets in Hobart, Darwin, and Perth continue to favor landlords.
- NSW rental crisis (Source: Sebastian Holloman)
NSW rental vacancies remain at crisis levels with Sydney’s vacancy rate reaching its lowest level in almost a year at 1.6%. The Real Estate Institute of NSW (REINSW) warns that upcoming rental reforms could further strain the vacancy rate. In Sydney, vacancy rates decreased in all rings, with Sydney’s inner and middle rings experiencing the most significant drops. Outside Sydney, vacancy rates remained stable in some regions but tightened in others, particularly in the Northern Rivers area. REINSW CEO Tim McKibbin emphasized that the shortage of available rental properties is causing rental market pressure and warned that the upcoming rental reforms could exacerbate the situation.
- Brisbane property market (Source: Melinda Jennison)
The Brisbane property market experienced a subdued April due to public holidays and political distractions, but the market remains strong with consistent dwelling value growth, particularly in the more affordable unit segment. Rental conditions are tightening, and buyer competition remains high for well-located properties. The impact of the federal election on property sentiment is uncertain, but another interest rate cut is anticipated in May and continued population growth supports ongoing, moderate price appreciation. However, global uncertainty, including US-China trade tensions, may weigh on confidence. Brisbane’s affordability, lifestyle appeal, and strong fundamentals make it a market to watch.
- Property markets (Source: Adrian Suljanovic)
The Australian property market exhibited diverse conditions in the first quarter of 2025, with some regions showing recovery and others experiencing challenges. NSW and Adelaide are attracting investors due to affordability and economic growth, while Victoria and Perth continue to perform strongly. Queensland and Tasmania are experiencing recovery, but face affordability challenges. The lower quartile of the housing market has been a significant driver in capital growth.
- South-East Queensland (Source: y Sebastian Holloman)
The median lot price in South-East Queensland reached record highs in the first quarter of 2025, surpassing Melbourne’s for the first time. The strongest growth was seen in Ipswich, driven by limited housing supply. South-East Queensland’s median lot price grew by 27% over the last 12 months, exceeding the Greater Brisbane market’s growth. Sales volumes remained steady but were down from the average quarterly rate. The affordability advantage over Melbourne was erased, but the outlook for future growth remains positive due to economic conditions.
- Commercial real estate (Source: CBRE)
Commercial real estate lending in Australia remains robust, with over half of surveyed lenders planning to increase their exposures, according to CBRE’s H1 2025 Lender Sentiment Survey. Lenders favor industrial and logistics properties, residential sector, and build-to-rent projects, while office assets and data centers have seen decreased interest. Lender appetite for refinancing is influenced by asset type and location, and there is division among lenders regarding interest rate cuts and terminal rates. Credit margins are expected to rise, and hedging requirements have declined.
- CoreLogic Auction Results (Week ending 11 May 2025)
(Total Auction / Clearance Rate)
– Sydney: 656 / 60.8%
– Melbourne: 799 / 68.7%
– Brisbane: 107 / 59.8%
– Perth: 11 / 72.7%
– Canberra: 50 / 62%
– Adelaide: 109 / 70.6%
– Tasmania: 3 / 33.3%
– Combined Capitals: 1,735 / 65%
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