Authored by the expert who managed and guided the team behind the Australia Property Pack
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What will happen in Australia’s real estate market? Will prices go up or down? Is Sydney still a hotspot for foreign investors? How is Australia’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with real estate agents, property developers, and clients who buy properties in Australia, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
1) Australia’s property prices will dip slightly as interest rates increase
Rising interest rates are cooling down the Australian property market.
Back in 2022 and 2023, the Reserve Bank of Australia hiked interest rates several times, which led to a noticeable drop in property transactions and inquiries. This clearly showed that higher interest rates can slow down buyer activity. As rates climbed to 3.35% by February 2023, the goal was to curb inflation, but it also made borrowing more expensive, naturally affecting people's willingness to invest in property.
During the 2023 financial year, there was a 31% decrease in capital flow into the real estate market. Real estate agencies noticed a slowdown in property sales, even though there was more stock available. This increase in available properties led to more sales but also softened demand, contributing to slower price growth. Potential homebuyers were worried about affordability, as higher interest rates made mortgage repayments more burdensome.
In the current market, buyers are cautious, and sellers are adjusting their expectations. The increase in available properties means buyers have more choices, but they are also more selective. This shift in dynamics is causing a slight decline in property prices, as sellers compete to attract the fewer active buyers.
For those considering buying property in the country, it's essential to understand these market changes. With interest rates on the rise, it's a good time to negotiate better deals, as sellers are more willing to compromise. However, keep in mind that mortgage costs will be higher, so it's crucial to budget accordingly.
Sources: Capital.com, Properties and Pathways, Realestate.com.au
2) More Chinese investors will look to Australian properties because of geopolitical tensions in other regions
Chinese investors are increasingly eyeing Australian properties, especially when geopolitical tensions rise.
In 2023, they bought $3.4 billion worth of approved residential real estate in Australia, a 40% jump from the previous year. This momentum carried into 2024, with more approvals and investments flowing into the Australian market. The appeal lies in Australia's stability, which becomes even more attractive when global uncertainties loom.
Historically, during global crises like the COVID-19 pandemic, Chinese investors have consistently turned to Australia. Even when Australia's borders were closed, Chinese buyers remained active, showing their preference for stable markets. This pattern indicates that as geopolitical tensions rise elsewhere, more Chinese investors might look to Australia for its security and reliability.
According to the Juwai IQI report, there's a noticeable trend of Chinese investors seeking stable and welcoming markets amid global uncertainties. The report suggests a potential exodus from China, with many eyeing countries like Australia. Surveys back this up, showing Australia as a top destination for Chinese property seekers, a trend likely to persist as geopolitical tensions continue.
Australia's appeal isn't just about stability; it's also about being welcoming. Chinese investors are drawn to places where they feel their investments are secure and appreciated. This is why Australia consistently ranks high on their list, especially when other regions face turmoil.
As geopolitical tensions elsewhere increase, expect more Chinese investors to consider Australia. They are looking for places where their investments can grow without the constant worry of political instability. Australia, with its stable economy and welcoming environment, fits the bill perfectly.
Sources: Property Update, Prime Capital, API Magazine
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.
3) Foreign investors will focus more on sustainable and eco-friendly real estate in Australia
Foreign investment in Australian real estate is increasingly focusing on sustainable and eco-friendly developments.
One major reason for this shift is the Australian government's commitment of $19.7 billion over the next decade to boost renewable energy and clean technologies. This includes initiatives like the Solar Sunshot and Battery Breakthrough Initiative, which are designed to make sustainable energy more accessible and affordable. These government incentives are not just numbers on paper; they are actively reshaping the landscape of real estate investment in the country.
There's also a growing consumer demand for sustainability, which is evident from the doubling of submissions for sustainability certifications. People are more conscious about their environmental footprint, and this is reflected in the real estate market. The Green Building Council of Australia has awarded a record number of Green Star certifications, showing that the industry is taking sustainability seriously.
Globally, there's a trend towards green investments, and this is influencing foreign investors to look at Australia as a prime location for eco-friendly developments. The global push to reduce emissions aligns perfectly with Australia's policy changes, such as the Net Zero in Government Operations Strategy, which encourages sustainable construction practices.
For those considering buying property in Australia, this means more options that are not only environmentally friendly but also potentially more cost-effective in the long run. The focus on sustainability is not just a trend; it's becoming a standard in the industry. This shift is making Australia an attractive destination for investors who are keen on green developments.
As the world moves towards a more sustainable future, Australia is positioning itself as a leader in eco-friendly real estate. This is not just about meeting current demands but also about preparing for a future where sustainability is key. The combination of government support, consumer demand, and global trends is creating a perfect storm for sustainable real estate investment in Australia.
Sources: KWM, GBCA Media Releases, Oxford Economics
4) Property prices on the Gold Coast will rise as retirees flock to its warmer climate
The Gold Coast is becoming a top choice for retirees, especially those from Sydney, thanks to its warm climate and appealing lifestyle.
In the year leading up to September 2023, the Gold Coast saw a 176.1% increase in net migration inflows, showing its growing appeal as a retirement hotspot. This surge is largely driven by retirees seeking a more relaxed and sunny environment.
Property prices here are climbing, with the median property price hitting $1,170,000, making it the second priciest in Australia. Over the past year, house prices have jumped by 9%, outpacing the national average. Experts predict this trend will continue, with prices expected to rise by 3% to 7% in 2025 due to high demand and limited supply.
The Gold Coast's climate is a big draw for retirees who are now focusing more on lifestyle after the pandemic. New retirement communities, like The Verge at Burleigh G.C., offer luxurious living options for those wanting an active lifestyle. These communities are designed with retirees in mind, providing amenities that cater to their needs.
Infrastructure improvements, such as the expansion of the light rail network, are enhancing connectivity and accessibility, making the area even more attractive to older residents. This development ensures that retirees can easily access various parts of the city, adding to the Gold Coast's allure.
Sources: Regional Australia Institute, Ray White Surfers Paradise, Retire Australia
5) Foreign buyers will target regional properties for investment as they look beyond crowded cities
Foreign buyers are turning their attention to regional properties as city prices soar.
With cities like Sydney and Melbourne becoming less attractive due to a projected market downturn, regions such as Townsville and the Sunshine Coast are expected to experience significant growth. Townsville, for instance, is anticipated to grow by 25-30% in 2025, thanks to economic improvements and its recognition as Australia's Port of the Year in 2024.
Government incentives are also drawing foreign buyers to regional areas. Programs like the Regional Economic Development Grants in Western Australia are boosting economic growth and creating jobs, making these areas more appealing for investment.
Regional properties offer lower entry costs compared to city properties. For example, the median house price in Townsville is significantly lower than in major cities, making it a more affordable option for foreign investors.
Improved infrastructure and connectivity in regional areas further enhance their appeal. Townsville, for example, has seen significant economic improvements and is recognized for its connectivity and infrastructure development, making it a more viable option for foreign buyers.
Media coverage highlighting the benefits of regional living, such as a better quality of life and lower cost of living, is also attracting foreign buyers. This increased visibility is drawing attention to the growing economic opportunities in these areas.
Surveys indicate a growing interest among foreign buyers in less crowded areas. While Victoria, New South Wales, and Queensland still see significant foreign investment, there is a noticeable shift towards other states like South Australia.
Sources: Property Director, GSDC, Broker News, API Magazine
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6) Luxury property prices in big cities will drop as demand moves to cheaper homes
In major cities, luxury property prices are expected to decline as more people look for affordable housing.
With rising interest rates, borrowing has become pricier, making luxury homes less accessible. This has led to a slowdown in home value growth, dropping from 9.7% in February 2023 to 6.0% by October 2024. As a result, more people are turning their attention to affordable housing options.
There's a noticeable uptick in the construction of affordable homes, which naturally pulls demand away from luxury properties. Governments are sweetening the deal for first-time buyers with incentives like subsidies and lower interest rates, nudging them towards more budget-friendly homes.
Demographics are shifting too. Younger buyers, often with tighter budgets, are entering the market and leaning towards affordable housing. Economic uncertainty, especially with the federal election on the horizon, is making people cautious, leading them to hold back on splurging on luxury properties.
Remote work trends are also influencing housing choices. Many are opting for homes that offer more space and affordability, often outside the city center, rather than investing in high-end urban properties.
As these factors converge, the market is seeing a clear pivot towards affordability, reshaping the landscape of property demand in major cities.
Sources: Ironfish, Minut, Realestate.com.au, Oliver Hume
7) Demand for housing in multicultural suburbs will rise due to increased immigration
In 2023 and 2024, Australia welcomed a significant number of immigrants, shaping the housing market in multicultural suburbs.
With net overseas migration figures hitting 446,000 in 2023/24, the influx of international students and skilled migrants has been a major driver of population growth. This trend is particularly noticeable in cities like Melbourne, where about half of the household growth is due to overseas migration.
Over the next 30 years, projections suggest that 80% of household growth in Melbourne will be attributed to immigration. Suburbs with high immigrant populations, such as Parramatta in Sydney, have already experienced significant housing booms, thanks to their vibrant multicultural communities.
Immigrants often choose to settle in areas where they have social connections or access to cultural amenities that cater to their ethnic backgrounds. This preference creates a self-reinforcing cycle, leading to higher demand for housing in these multicultural suburbs.
The demographic profile of immigrants, who are often young adults, further drives up housing demand. These young adults are typically in the prime of their careers, seeking opportunities and stability, which makes them eager to invest in property.
As a result, suburbs with diverse communities are seeing a surge in housing demand, making them attractive spots for property investment. The multicultural fabric of these areas not only enriches the community but also boosts the local economy through increased housing activity.
Sources: Parliamentary Business, National Housing Supply and Affordability Council, The PIE News
8) New environmental rules will raise building costs, affecting property prices
In Australia, new environmental regulations are set to change the property landscape.
These regulations, like the Modern Homes standards in Queensland, aim to make homes more energy-efficient. Builders now need to meet higher energy efficiency ratings, which means construction costs are going up. For instance, the removal of optional credits for solar photovoltaic systems and compliance with the NCC 2022 star rating requirements are expected to raise costs.
In New South Wales, the National Construction Code (NCC) updates have led to over 75% of new homes being rated above 7 stars. While this is great for energy savings, it comes with an average cost increase of $4,300 per home. Although these costs are balanced by lower energy bills, the initial expense can still affect the overall cost of building new homes.
Moreover, the price of sustainable building materials is on the rise. Think about double glazing and solar shingles; they’re not cheap. For example, installing a new roof with sustainable options can be significantly more expensive than using traditional materials. These higher costs often get passed on to homebuyers, which could impact property prices.
So, if you're considering buying a property, keep in mind that these new regulations might affect what you pay. Builders are facing increased costs, and these are likely to be reflected in the market. It's a balancing act between upfront costs and long-term savings.
As these changes unfold, property prices could see some shifts, especially in areas where these regulations are strictly enforced. It's an evolving situation, and staying informed will be key to making the best decision for your investment.
Sources: Queensland's Measures to Support Implementation of the Modern Homes Standards, New NCC Standards Driving Energy Efficiency at Low Cost, Cost to Build a Green Home
We have made this infographic to give you a quick and clear snapshot of the property market in Australia. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
9) Interest in large family homes will decline as smaller, efficient spaces become more popular
In Australia, city living is on the rise as more people move to urban areas.
With cities like Melbourne and Sydney becoming increasingly crowded, population densities have soared to 38,400 and 21,000 people per square kilometer respectively. This crowding, along with rising property prices, is making large family homes less appealing. People are now opting for smaller, more affordable living spaces, which are not only practical but also help save money.
There's also a growing trend towards environmental consciousness. Many Australians are becoming more aware of their carbon footprints, and this has led to a preference for smaller, energy-efficient homes. Governments are supporting this shift by offering incentives for such housing, making it an attractive option for many.
Minimalist living is gaining popularity, thanks in part to media and social platforms that showcase this lifestyle. This trend is encouraging people to embrace simpler, more efficient living spaces, further driving the demand for smaller homes.
In urban areas, the practicality of smaller homes is undeniable. With limited space and high costs, smaller homes offer a sustainable solution for those looking to live comfortably without breaking the bank.
As the urbanization rate continues to climb, reaching 86.62% in 2023, it's clear that the preference for smaller homes is not just a passing trend but a significant shift in how Australians choose to live.
Sources: ABS, National Housing Supply and Affordability Council, Statista, Deloitte
10) Adelaide's northern suburbs will gain popularity as transport improves and housing remains affordable
Adelaide's northern suburbs are becoming a hot spot for homebuyers, thanks to improved transport links and affordable housing.
With the government's investment in projects like the Northern Expressway and the Gawler rail line, commute times to the city center have been slashed. This makes living in the northern suburbs a breeze for city workers. Imagine hopping on a train and being in the heart of Adelaide in no time. These transport upgrades are a game-changer for anyone considering a move.
Housing affordability is another big draw. Even with a 130% rise in house prices over five years, places like Elizabeth Downs are still budget-friendly. The median house price here is $435,250, which is a steal compared to the rest of Adelaide. This affordability means homes are snapped up quickly, often with multiple offers on the table the same day they hit the market.
Looking ahead, the northern suburbs are set for a population boom. Areas like Munno Para West and Angle Vale are projected to see a 142% increase in residents by 2036. Local government plans are in place to support this growth with new residential developments and infrastructure. This means more amenities and a better quality of life for those who choose to call these suburbs home.
As these areas continue to evolve, they’re becoming increasingly attractive to those seeking a balance of affordability and convenience. The combination of easy city access and lower housing costs is hard to resist. Plus, with ongoing development, the northern suburbs are poised to offer even more in terms of lifestyle and community.
Sources: Domain’s Real Estate Data, The Post’s Infrastructure Report, Home.id’s Forecast Review
11) Property values in overlooked suburbs will rise due to better public transport links
Improved public transport links can significantly boost property values in suburbs that were once overlooked.
When a suburb gets better transport connections, it becomes more accessible and attractive to potential buyers. This increased demand often leads to a rise in property values. Take Sydney's Redfern, for example. It wasn't always popular, but with improved transport links, property values saw a notable increase. The same happened in Melbourne's Footscray, where better transport options made the area more appealing to families and young professionals.
Real estate experts predict that suburbs with planned transport projects will see significant property value increases. Enhanced connectivity reduces commute times, making these areas more convenient for residents. Government investments in transport infrastructure, like the Rebuilding NSW initiative, are expected to drive up property values in connected suburbs. Surveys show that access to public transport is a top priority for homebuyers, leading to higher property prices in well-connected areas.
Academic studies support this, showing a positive correlation between transport accessibility and property values. Properties near public transport hubs typically have higher values compared to those further away. Media articles and expert opinions highlight success stories of suburbs transformed by transport upgrades. For instance, Enmore in Sydney has become a sought-after location due to its proximity to the city and its own train station.
Urban planners and economists agree that improved transport links significantly impact real estate, making suburbs more attractive for investment. Suburbs with better transport options become more appealing to families and young professionals. This trend is evident in areas like Footscray and Redfern, where transport improvements have transformed their desirability and property market.
In summary, better transport connections make suburbs more accessible and attractive, leading to increased demand and higher property values. This is especially true in areas with planned transport projects and government investments in infrastructure. As a result, suburbs with improved transport links become more appealing to potential buyers, driving up property values.
Sources: Parker Hadley, Domain, Realestate.com.au, Infrastructure NSW
Our team came across this video analyzing Melbourne’s suburban rail loop and Brisbane’s metro upgrades, showing how new transport links are driving up property values in previously overlooked suburbs.
12) Property demand in Queensland's coastal towns will rise as remote work becomes more common
Remote work is reshaping where Australians choose to live.
By 2025, 83% of companies plan to have over 60% of their workforce working remotely, allowing people to prioritize lifestyle over proximity to the office. This shift is making coastal towns in Queensland, like the Sunshine Coast and Brisbane, more appealing. The Sunshine Coast has seen a steady annual house growth of 5%, while Brisbane's property prices have surged by 64% since the onset of COVID-19, reflecting a growing interest in these areas.
Queensland's coastal towns are not just beautiful; they are becoming tech-friendly too. Thanks to investments by the Queensland Government and Sunshine Coast Council, internet infrastructure has significantly improved. This means remote workers can enjoy the coastal lifestyle without sacrificing their work needs.
People are flocking to these regions, with Queensland's coastal areas recording a 2.3% population growth in the year leading up to mid-2024. The allure of beaches and natural attractions is a big draw, often highlighted in media coverage, making these areas even more desirable.
Living in Queensland's coastal towns offers a unique blend of work-life balance. The enhanced digital connectivity and lifestyle benefits make it an ideal choice for those who can work from anywhere. Imagine starting your day with a beach walk before logging into work, all while staying connected with top-notch internet.
As remote work becomes more prevalent, the demand for properties in these coastal towns is expected to rise. The combination of lifestyle, improved infrastructure, and the freedom to work remotely is a powerful attraction for potential buyers.
Sources: Ecommerce News, Property Update, QCN, Calibre Real Estate
13) Tasmania's properties will attract more investors because they are affordable and tourism is growing
Properties in Tasmania are becoming a hot ticket for investors, thanks to their affordability compared to big Australian cities.
In 2023 and 2024, buying a house in Tasmania was a bargain compared to places like Sydney and Melbourne. This price difference is a big draw for those looking to invest in real estate. The island's charm isn't just about cost; it's also about the lifestyle and opportunities it offers. With its stunning landscapes and relaxed pace, Tasmania is attracting more than just investors; it's pulling in people looking for a change of scenery.
There's been a 23.3% jump in interstate buyers snapping up properties in Tasmania over the June quarter of 2023. This surge shows that mainland Australians are keen on what Tasmania has to offer, whether they're moving there or just investing. The combination of affordable prices and increased interest suggests that property values could rise, making it a smart move for investors.
Tasmania's tourism industry is booming, adding another layer of appeal for investors. In 2023, tourism pumped $3.63 billion into the local economy, and jobs in this sector shot up by 21% from the previous year. This growth means more visitors are coming, which boosts the demand for places to stay. For property investors, this translates to more opportunities to profit from rentals and accommodations.
With tourism on the rise, the local economy is getting a significant boost, making Tasmania an even more attractive place to invest. The island's natural beauty and unique attractions are drawing more tourists, which in turn fuels the need for more accommodations. This cycle of growth is a win-win for both the economy and property investors.
Investors are taking note of Tasmania's potential, not just for its current affordability but for its future growth prospects. As more people discover the island's charm and opportunities, the demand for property is likely to keep climbing. This makes Tasmania a promising spot for those looking to invest in real estate.
Sources: Smart Property Investment, Premier of Tasmania, Minister for Infrastructure, Transport, Regional Development and Local Government
14) Virtual reality will become standard for property viewings, transforming buyer interactions with the market
Virtual reality is revolutionizing property viewings in the real estate market.
In Australia, the VR market was worth USD 2.07 billion in 2023 and is expected to skyrocket to USD 6.27 billion by 2029. This surge shows how quickly VR is being embraced across different industries, especially real estate. Imagine exploring a potential new home from your couch, getting a feel for the space without stepping outside.
Real estate listings with virtual tours are getting a lot more attention. They receive 87% more views than those without, and people spend 5-10 times longer on these sites. This means buyers are not just curious; they’re deeply engaged when they can virtually walk through a property.
Surveys reveal that over 50% of adults have already taken a virtual tour. Many buyers now prefer these immersive experiences over just looking at photos. It’s like being there in person, offering a more interactive way to explore properties.
With VR, you can check out a property’s layout, size, and even the neighborhood vibe, all from your living room. This tech is not just a novelty; it’s becoming a must-have tool for anyone serious about buying property.
Sources: TechSci Research, PhotoUp
We made this infographic to show you how property prices in Australia compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
15) Demand for eco-friendly homes will grow as buyers focus more on the environment
Eco-friendly homes are gaining traction as people become more environmentally conscious.
In Australia, sustainable housing projects like RACE for 2030 are making waves by aiming to boost energy efficiency in over a million homes. This initiative highlights a clear shift towards greener living, reflecting a broader trend in the housing market. As more people prioritize sustainability, the demand for eco-friendly homes is expected to rise.
The construction industry is also seeing a surge in the use of innovative materials like composite timber, which are becoming popular due to their eco-friendly nature. This shift is driven by a growing market for sustainable building materials, as more companies offer greener options. The steady growth in this market indicates a strong preference for environmentally friendly construction practices.
Homebuyers are increasingly drawn to energy-efficient homes, with Green Star Homes offering significant energy cost savings. These savings often outweigh the initial investment, making such homes financially appealing. This financial advantage is a key factor motivating buyers to opt for eco-friendly properties, as they can enjoy long-term savings while contributing to a healthier planet.
Government incentives are also playing a pivotal role in promoting green building practices. In 2023, the Federal budget allocated funds for low-interest loans and energy efficiency improvements in housing. Additionally, many lenders are offering interest rate reductions for Green Star Homes, making sustainable choices more accessible to a wider audience.
Sources: RACE for 2030, 6Wresearch, Green Building Council of Australia
16) Tech-enabled properties will become more appealing as smart home technology advances
Smart home technology is making properties more appealing to buyers in Australia.
By 2023, 7.6 million Australian households had embraced smart home products, with each home boasting an average of 23.8 connected devices. This surge in adoption is largely due to the convenience and efficiency these technologies offer. Imagine controlling your lights, thermostat, and security system all from your smartphone—it's no wonder people are jumping on board.
Australians are also increasingly interested in energy-efficient homes. 28% of households are keen on smart energy solutions to reduce their environmental footprint. This interest is not just about saving on utility bills; it's about making a positive impact on the planet. Many solar panel owners are even joining Virtual Power Plant programs, which allow them to share excess energy with their communities.
Buyers are showing a clear preference for tech-enabled homes. A Telsyte study found that nearly half of smart home adopters want more advanced technologies. This indicates a growing demand for homes that offer more than just basic automation. People are looking for homes that can adapt to their lifestyles and offer enhanced security and energy management.
The financial potential of the smart home market is staggering. In 2023, Australia's smart home market was valued at USD 2.09 billion, and it's expected to skyrocket to USD 8.48 billion by 2030. This growth is driven by advancements in AI, energy savings, and security features, making tech-enabled homes a wise investment for the future.
For those considering buying property in Australia, investing in a smart home could be a game-changer. Not only do these homes offer convenience and efficiency, but they also align with the growing trend of sustainable living. As technology continues to evolve, the demand for smart homes is only going to increase, making them a valuable asset in the real estate market.
Sources: Telsyte, iTWire, NextMSC
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.