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Australia's residential property market shows strong fundamentals despite affordability challenges, with Sydney house prices reaching $1.53 million and Brisbane leading growth at 6.7% annually.
(The Australian property market in September 2025 presents a complex landscape of rising prices, tight supply, and evolving government policies that will significantly impact both investors and homebuyers over the next 24 months.)If you want to go deeper, you can check our pack of documents related to the real estate market in Australia, based on reliable facts and data, not opinions or rumors.
As of September 2025, Australia's property market displays strong price growth despite affordability concerns, with Brisbane outperforming other capitals and rental markets remaining tight nationwide.
Interest rate cuts are expected to improve affordability while sustained population growth continues driving demand across major cities and regional areas.
| City | Median House Price (Aug 2025) | Annual Growth | 2025-26 Forecast |
|---|---|---|---|
| Sydney | $1,525,956 | +2.2% | +3-4.6% |
| Melbourne | $983,000 | +2.15% | +2.15-6.5% |
| Brisbane | $1,019,865 | +6.7% | +6.7% |
| Perth | Not specified | Strong growth | +8-10% |
| Adelaide | Not specified | Strong growth | +7-9% |
| National Rental Vacancy | 1.2-1.3% | Below average | Tight conditions continue |
| RBA Cash Rate | 3.60% | Recently cut | Expected 3.10-2.85% |
What are the current median house prices in Sydney, Melbourne, and Brisbane, and how have they changed from last year?
As of August 2025, Sydney leads Australia's property market with a median house price of $1,525,956, representing a modest 2.2% increase from the previous year.
Melbourne's median house price sits at $983,000, showing similar growth patterns with a 2.15% annual increase. Brisbane has emerged as the standout performer among major capitals, with its median house price reaching $1,019,865 after experiencing robust 6.7% annual growth.
These price movements reflect different market dynamics across Australia's major cities. Sydney's slower growth indicates market maturation and affordability constraints, while Brisbane's strong performance demonstrates continued interstate migration and investor confidence in Queensland's economy. Melbourne's steady but modest growth suggests market stability despite economic uncertainties.
The price differences between these cities create distinct investment opportunities. Sydney remains the most expensive market but offers stability, Melbourne provides middle-ground pricing with steady appreciation, and Brisbane presents the strongest growth momentum among the three major capitals.
It's something we develop in our Australia property pack.
How are apartment prices performing compared to detached houses across Australia?
Australia's apartment market is experiencing stronger growth momentum than many investors realize, with national unit prices rising 6.1% annually compared to detached houses at 7.7%.
Brisbane stands out as the exception, where apartment prices surged 10.6% year-on-year, actually outpacing house price growth in that market. This performance indicates strong demand for higher-density living in Queensland's capital.
National forecasts suggest apartment prices will increase 3-6% in 2025-26, often matching or exceeding house price growth, particularly in Perth and Brisbane markets. This trend represents a shift from historical patterns where houses typically outperformed apartments.
The apartment market benefits from several factors including lower entry costs, higher rental yields in many areas, and growing preference for urban living among younger demographics. Foreign investors also show renewed interest in premium apartment developments, especially in Sydney and Melbourne CBD areas.
What is the current national rental vacancy rate and how does it compare to long-term averages?
Australia's national rental vacancy rate remains critically tight at 1.2-1.3%, substantially below the long-term average and indicating severe rental supply shortages nationwide.
| City | Current Vacancy Rate | Market Condition | Rent Growth Impact |
|---|---|---|---|
| Sydney | 1.5% | Very tight | Upward pressure |
| Melbourne | 1.7% | Very tight | Upward pressure |
| Brisbane | 1.0% | Extremely tight | Strong upward pressure |
| Perth | Below 1.5% | Very tight | Significant upward pressure |
| Adelaide | Below 1.5% | Very tight | Upward pressure |
| National Average | 1.2-1.3% | Critical shortage | Sustained growth |
| Historical Average | 3.0-3.5% | Balanced market | Moderate growth |
These vacancy rates indicate landlord-favorable conditions across all major markets. Brisbane's 1.0% vacancy rate represents the tightest rental market among major capitals, explaining the city's strong rental growth and investment appeal.
How much have weekly rents increased in capital cities versus regional areas over the past year?
Weekly rents in Australia's capital cities increased approximately 3-5% over the past 12 months, while regional areas experienced faster growth, particularly in lifestyle destinations.
Regional rental markets have outpaced capital cities due to continued interstate migration patterns and limited rental supply in smaller markets. Popular regional areas like the Gold Coast, Sunshine Coast, and regional Victorian centers have seen rental increases of 6-8% annually.
The rental growth disparity between capitals and regions reflects different demand drivers. Capital cities face supply constraints and population growth, while regional areas deal with lifestyle migration and even tighter supply conditions.
This rental growth pattern creates investment opportunities in both markets. Capital city rentals offer stability and liquidity, while regional properties can provide higher rental yields and stronger growth potential, though with higher risk profiles.
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What are the latest housing supply figures, including new dwelling approvals and construction completions?
Australia's housing supply remains constrained with new dwelling approvals and construction completions staying below historical averages, creating ongoing supply-demand imbalances.
Construction industry challenges including labor shortages, material costs, and regulatory delays continue limiting new supply delivery. These constraints particularly affect apartment developments and first-home buyer segments.
The supply shortage is most acute in high-growth areas like Southeast Queensland and Perth, where population growth exceeds new dwelling completions. This imbalance supports continued price growth and rental yield strength.
Government initiatives to accelerate housing supply include streamlined planning processes and infrastructure investment, but meaningful supply increases will require 12-24 months to impact market conditions.
How many months of housing inventory are currently available, and how does this compare historically?
Australia's housing inventory levels remain at critically low 2-3 months across major markets, well below the historical average of 4-6 months and indicating strong seller's market conditions.
These inventory levels create competitive buying conditions with properties often selling quickly and sometimes above asking prices. Limited stock gives sellers significant negotiating power and supports price growth.
The inventory shortage affects all property types but is most pronounced for well-located family homes and quality apartments in major capitals. Regional markets also show similar tight inventory conditions.
Historical comparison shows current inventory levels are among the lowest recorded, suggesting the seller's market will persist until construction output increases significantly or demand moderates.
What is happening with mortgage interest rates and their projected impact on affordability?
The Reserve Bank of Australia recently cut the cash rate to 3.60%, with major banks forecasting further reductions to 3.10-2.85% by early 2026.
Mortgage interest rates are beginning to decline, which should improve affordability conditions for buyers, though the impact will be moderated by elevated property prices. Banks are cautiously optimistic about continued rate cuts supporting market activity.
The rate cutting cycle represents a significant shift from the previous tightening period and should stimulate both owner-occupier and investor demand. Lower rates particularly benefit refinancing activity and new purchase financing.
Despite rate reductions, affordability remains challenged by high property prices, with buyers still facing substantial deposit requirements and serviceability assessments. The rate relief will help but won't completely offset price growth impacts.
It's something we develop in our Australia property pack.
What percentage of household income is required to service an average new mortgage?
Australian households now require approximately 43% of their income to service a new mortgage in major capital cities, substantially above the 10-year average of around 36%.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Australia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
How are population growth and migration numbers affecting housing demand across different states?
Strong population growth and net overseas migration continue driving robust housing demand, with Queensland, Western Australia, and Victoria experiencing the highest growth rates.
Regional migration patterns are boosting demand in areas like Southeast Queensland, while major cities maintain strong appeal among new arrivals and young professionals. Interstate migration from Sydney and Melbourne to Brisbane and Perth continues supporting those markets.
Net overseas migration recovery to pre-pandemic levels creates sustained demand pressure, particularly in gateway cities. New arrivals typically require rental accommodation initially, supporting tight rental markets.
State-by-state demand varies significantly, with Queensland benefiting from lifestyle migration and resource sector employment, while Victoria and New South Wales rely more on international migration and economic opportunities.
What do major banks and analysts forecast for property price growth over the next 12-24 months?
Major banks and economic analysts predict moderate price growth across Australian property markets in 2025-26, with significant variation between cities and property types.
| City | House Price Forecast 2025 | Apartment Price Forecast 2025 | Key Growth Drivers |
|---|---|---|---|
| Sydney | +3-4.6% | +4-6% | Rate cuts, stable demand |
| Melbourne | +2.15-6.5% | -2% to +5% | Economic recovery, supply |
| Brisbane | +6.7% | +5-7% | Migration, economic growth |
| Perth | +8-10% | +8-10% | Resource sector, tight supply |
| Adelaide | +7-9% | +7-9% | Affordability, interstate migration |
| National Average | +4-6% | +3-6% | Rate cuts, supply constraints |
How is government policy likely to influence the property market?
Government policy at federal and state levels will significantly influence Australia's property market through first-home buyer incentives and rental market reforms.
First-home buyer support including stamp duty relief and shared equity schemes in NSW and Victoria will boost entry-level demand, particularly benefiting apartments and outer suburban properties. These policies specifically target affordability challenges.
Rental market reforms including tighter regulations and potential rent caps in Victoria and Queensland are increasing investor caution, potentially reducing rental supply growth. These reforms aim to protect tenants but may discourage some property investment.
Overall policy impact creates marginal support for first-time buyers while moderately cooling investor activity, resulting in mixed effects on market supply and demand dynamics.
What are international investors doing in the Australian property market?
International investor activity in Australia's property market declined significantly during 2022-2024 due to tighter lending restrictions and higher foreign buyer surcharges.
Since early 2025, renewed interest from Asian investors, particularly in Sydney and Melbourne premium markets, has emerged as the Australian dollar remains attractive and migration flows recover. Chinese and Singaporean investors show particular interest in established apartment buildings and luxury developments.
Foreign investment volumes remain below pre-pandemic peaks but premium sectors including luxury apartments and CBD commercial properties show signs of recovery. Investors focus on established rather than off-the-plan properties due to lending constraints.
The international investor segment continues facing regulatory hurdles but benefits from Australia's stable political environment, transparent legal system, and strong rental yields in premium segments.
It's something we develop in our Australia property pack.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Australia's property market in September 2025 presents compelling opportunities despite affordability challenges, with strong fundamentals supporting continued growth across most markets.
Investors and homebuyers should focus on markets with strong population growth, improving affordability through rate cuts, and diversified economic bases for the best long-term prospects.