- Australian economic and financial markets (Source: RBA)
The Australian economy is still growing, despite concerns about global economic downturns. Australians have more equity in their homes and savings compared to three years ago, despite a decrease in savings ratio. The unemployment rate remains low at 4.1%, and the labour force participation rate has increased. Inflation is decreasing globally, which should help the RBA control inflation in Australia. However, the impact of Trump’s tariffs is uncertain. The housing market is experiencing a shortfall, with a significant deficit of over 200,000 properties. Consumer confidence is fragile due to geopolitical risks and economic uncertainty. Business investment has softened, particularly among smaller enterprises, and government spending remains a key support. Exports are holding up due to strong demand for commodities like iron ore and LNG. Confidence is expected to remain low, and economic growth will likely remain subdued.
- Regional Market Update (Source: CoreLogic)
The gap between regional and capital city housing market performance is narrowing, with regional areas outperforming capitals in quarterly growth, although the difference has lessened since the start of the year. Western Australia continues to lead in growth, while Queensland is falling behind. Regional rental growth eased to 5.5% annually, but still nearly double the capital city increase of 2.9%. The top performing regions for quarterly growth include Albany, Geraldton, Victor Harbour — Goolwa, Mildura — Buronga, and Mackay. The weakest performers were Bathurst, Nelson Bay, and Geelong. Selling conditions generally followed growth trends, with WA and Queensland regions posting the strongest results, and NSW and Victoria reporting some of the weakest. Rental growth moderated due to affordability challenges, household consolidation, and slower overseas migration, but still saw reasonably strong increases across most regional markets. Albany led rent growth with a 5.7% lift in the quarter, followed by Burnie — Somerset and Taree.
- Housing market (Source: Emilie Lauer)
Investor activity in the property market is surging, with investor loans increasing by 19% over the last year, significantly more than the 6% growth in owner-occupier loans. Victoria has seen a 12% rise in investor loans during the March quarter, driven by stamp duty concessions for off-the-plan properties and some investors offloading rental properties. The number of refinanced loans has also increased, with investors leading this activity, as they take advantage of falling interest rates.
- Housing supply (Source: NHSAC)
The National Housing Supply and Affordability Council’s (NHSAC) State of the Housing System 2025 report revealed that slower dwelling price growth in 2025 stemmed from Australia falling short of National Housing Accord home construction targets, leading to a tight supply. The report shows that Australia is falling short of its target to build 1.2 million dwellings by 2029, with only 938,000 dwellings expected to be completed even under optimal economic conditions. The underlying demand for housing is gradually moderating, but the net new supply of dwellings is expected to widen to a deficit of 825,000 properties by 2029. The report also attributes the housing shortage to various factors, including inadequate labor pipelines, low productivity rates, and complex planning approval systems. The Property Council of Australia calls for streamlining approval processes and increasing the number of laborers in the building sector to meet housing targets. No state or territory is forecast to meet its housing target, with the Northern Territory expected to fall the furthest.
- Buyer sentiment (Source: Emilie Lauer)
The RBA’s rate cut in May 2025 has led to a surge in buyer sentiment, with 36% of Australians now believing it’s a good time to buy a property. This represents a 7% increase from May 2024. The reduced cash rate has made property investment more accessible, leading to an increase in owner-occupier loans and a rise in demand for properties. Homeowners may be holding off selling due to expected further rate cuts, resulting in fewer properties available and heightened competition among buyers.
- The construction industry (Source: Craig Francis)
The construction industry in Australia is experiencing a high rate of insolvencies, with smaller builders being particularly affected. According to Equifax data, insolvencies in the sector have been slowing down, but the industry still faces significant challenges, including a decline in credit demand and ongoing labour shortages. Despite these issues, new home sales have been increasing, and the HIA expects detached house building to lead a recovery in home construction. However, long-term structural issues, such as land shortages and regulations, continue to pose risks to housing affordability and national supply targets.
- CoreLogic Auction Results (Week ending 25 May 2025)
(Total Auction / Clearance Rate)
– Sydney: 799 / 67.3%
– Melbourne: 1,223 / 66%
– Brisbane: 205 / 56.6%
– Perth: 18 / 44.4%
– Canberra: 96 / 62.5%
– Adelaide: 119 / 61.3%|
– Tasmania: NA / 0%
– Combined Capitals: 2,460 / 65.1%
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