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What is happening in Australia’s real estate market? Are prices on the rise or decline? Is Sydney still a prime location for international investors? How are government policies and taxes shaping the real estate landscape in 2025?
These are the questions we hear every day from professionals, buyers, and sellers across the country, from Melbourne to Brisbane and beyond. You might be curious about these trends too.
We stay closely connected with local experts and individuals like you, exploring the Australian real estate market daily. That’s why we’ve crafted this article: to deliver clear answers, insightful analysis, and a comprehensive view of market trends and dynamics.
Our aim is straightforward: to make sure you feel informed and confident about the market without needing to search elsewhere. If you think we’ve missed something or could improve, we’d love to hear your feedback. Feel free to message us with your thoughts, and we’ll strive to enhance this content for you.
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1) Foreign buyers will increasingly target Australian properties as the government relaxes international travel restrictions
In 2023 and 2024, foreign investment in Australian real estate surged as travel restrictions eased.
Foreign buyers snapped up 5,360 properties, spending $4.9 billion, a notable 27% increase from the previous year. This uptick was fueled by the reopening of international borders, allowing potential buyers to finally act on their plans.
The Australian Taxation Office noted a 27% rise in foreign property purchases over the last financial year, with Victoria and Queensland emerging as hotspots. Real estate agencies reported a spike in inquiries from overseas clients during these periods of eased travel restrictions.
Despite hurdles like high FIRB application fees and foreign buyer stamp duty, Australia remains a top choice for foreign investors. Media reports continue to highlight the country's appeal, even as some costs remain a challenge.
Changes in the Federal Budget have also played a role, with reduced FIRB fees for Build to Rent properties potentially drawing more foreign interest. This adjustment in the investment framework is seen as a strategic move to attract international buyers.
As the government eases travel restrictions, foreign buyers are expected to show increased interest in Australian properties, making it a dynamic time for the real estate market.
Sources: Property Update, API Magazine, Your Investment Property Magazine
3) Hobart’s property market will cool slightly after rapid growth, resulting in more balanced pricing
Hobart's property market is finally cooling down after years of rapid growth.
In the past year, the median house price in Hobart dropped by 7.2%, while the median unit price fell by 4.4%. This decline is part of a larger trend since March 2022, where prices have fallen over 12%. The market is adjusting, and buyers might find more balanced pricing now.
There's also more housing available. In the second half of 2024, new projects worth $1.1 billion started construction, adding 49 units and 12 townhouses. Plus, government efforts like the Social Housing Accelerator are boosting the housing stock, making it easier for potential buyers to find a home.
Interest rates are another factor. With rates rising, it's tougher for buyers to get loans, which has helped ease prices. Surveys show that demand is down, and properties are staying on the market longer, indicating a cooling trend.
For those looking to buy, this could be a good time. The market is shifting, and there's a chance to find a property at a more reasonable price. Keep an eye on these changes if you're considering a move to Hobart.
Sources: PRD Hobart Market Update, Savings.com.au, Premier of Tasmania
4) Sydney will experience moderate price increases as demand exceeds supply
In 2025, Sydney's property prices are on the rise, and here's why.
Last year, home prices in Sydney jumped by 4.5%, with houses averaging $1,473,775 and units at $860,849. This trend is expected to continue, with experts predicting another 5% increase in 2025. The city's growing population is a big part of the story. In 2024, Sydney's population grew by 1.25%, reaching 5,185,000, which means more people are looking for homes.
But it's not just about more people; it's also about where they can live. Sydney has limited land for new housing, and new dwelling approvals are on the decline. This makes it tough to keep up with demand, pushing prices higher. The rental market is feeling the squeeze too. Vacancy rates are at historic lows, which means rental prices are soaring as people scramble for available properties.
High demand is also evident in the auction market. Even with a lower clearance rate of 61.7% in the final week of 2024, Sydney's auctions show strong interest. This indicates that buyers are still eager, despite the challenges. The combination of these factors creates a competitive environment where demand consistently outpaces supply.
Sources: Property Update, Macrotrends, Property Update Auction Results, Aus Property Professionals, OpenAgent
5) Brisbane's property prices will dip slightly as new housing developments boost supply
In 2023, Brisbane saw a remarkable surge in housing development approvals, with 1072 new homes greenlit in September.
This number is nearly double the monthly average from last year, showing a significant boost in new home supply. Major projects like the 628 build-to-rent apartments in Fortitude Valley and a towering 30-storey building in South Brisbane are set to add thousands of homes to the market.
These developments are part of a larger push to increase housing availability across the city. The Brisbane City Council is actively working on this through their Housing Supply Action Plan, which aims to speed up the delivery of new homes by offering financial incentives.
The plan is focused on promoting sustainable growth and tackling the housing crisis by boosting supply, especially in inner-city and high-density areas. This means more options for potential buyers and renters, as the city prepares for a slight decline in property prices due to increased supply.
With these efforts, Brisbane is positioning itself to meet the growing demand for housing while keeping prices in check. The city's strategy is to ensure that as new developments rise, they contribute to a balanced market.
Sources: The Urban Developer, Vicki Howard
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6) Coastal towns in Australia will see rising property prices as people pursue lifestyle changes after the pandemic
After the pandemic, many Australians are rethinking where they want to live, with coastal towns becoming a top choice.
Thanks to remote work, people no longer need to be near city offices, making a "sea change" to coastal areas more appealing. Imagine working with a view of the ocean instead of a city skyline. Real estate agents are noticing a big jump in interest for coastal properties, as folks look for a better lifestyle.
Property prices in these coastal towns are climbing faster than in the cities. The Domain Forecast Report highlights that places like the Gold Coast and Sunshine Coast are expected to see significant price growth by the end of 2025. This shows that more people are ready to invest in these areas, pushing demand and prices even higher.
Migration patterns back this up, with more people moving from cities to coastal regions. Brisbane, for example, has seen a notable increase in residents through net internal migration, while Melbourne's numbers have dropped. This shift indicates that people are choosing the laid-back vibe of coastal towns over the hectic city life.
Coastal living offers a unique blend of relaxation and beauty, which is hard to find in urban centers. The pandemic has made many realize the value of space and nature, and coastal towns provide just that. With the ocean at your doorstep and a slower pace of life, it's no wonder these areas are becoming so popular.
Sources: Domain, Black Fox Real Estate, Australian Bureau of Statistics
7) Sydney's rental yields will dip slightly as high property prices hinder strong returns
Sydney's property market is experiencing a shift as property prices soar, making it tough for investors to see strong rental returns.
In 2024, the median dwelling price in Sydney hit $1,196,809, while the median rent was just $833.07. This gap highlights the challenge for investors trying to balance high property costs with rental income. Historically, Sydney's rental yields have been on the lower side, especially in high-cost areas.
Back in August 2022, gross rental yields were 2.6% for houses and 3.5% for apartments, which is below the pre-COVID average of 4.0%. This indicates that high property prices are putting pressure on rental yields, making it harder for investors to achieve the returns they might expect.
Real estate agencies are also reporting a slowdown in rental demand. This is largely due to the high property prices and affordability issues, which means investors might not see the same rental returns as before. The increased supply of rental properties is adding to the competition among landlords.
With more properties available, landlords might have to offer lower rents to attract tenants, further impacting rental yields. This increased competition is a direct result of the high property prices, which are making it difficult for investors to maintain strong returns.
Sources: Property Update, Property Update, Global Property Guide
8) Melbourne's rental yields will remain stable as the market adapts to post-lockdown conditions
Melbourne's rental market is remarkably stable as it adjusts to post-lockdown conditions.
One big reason for this stability is the rising rental demand due to Melbourne's population boom. In 2022-23, the city saw an increase of 167,500 people, which is a growth rate of 3.3%. This surge means more people are looking for places to rent, leading to low vacancy rates and higher rents.
Migration is another key factor. Melbourne has always been a magnet for international immigrants, with 48,000 newcomers in 2020 alone. This influx of new residents has boosted the demand for rental properties, keeping rental yields steady.
Rental prices in Melbourne are on the rise, with vacancy rates dropping to just 1.5%. This low rate is a clear sign of high demand, which supports stable rental yields. When there are fewer empty properties, landlords can maintain or even increase rents.
Melbourne's lifestyle and amenities are a big draw for tenants. The city often ranks among the world’s most liveable cities, attracting people who love its vibe and conveniences. This preference keeps the demand for rental properties high, stabilizing rental yields.
For anyone considering buying property in Melbourne, these factors suggest a promising rental market. The combination of population growth, migration, and lifestyle appeal makes it a solid choice for investment.
Sources: Australian Bureau of Statistics, The Glade Design, JLL
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.
9) New zoning laws will promote higher-density housing in urban areas
Australia's capital cities have seen a surge of over 500,000 new residents by June 2023, mainly due to overseas migration.
This influx is putting pressure on urban housing, and the Business Council of Australia warns of a housing supply crisis. They emphasize that the country is not meeting its goal of building 1.2 million new homes in five years, highlighting the need for zoning law changes to boost housing development.
In response, cities like Sydney and Melbourne are making zoning changes to support higher-density housing. Sydney plans to add 170,000 new homes around train stations, while Melbourne's Suburban Rail Loop will bring 70,000 homes near new stations. These projects aim to make city living more accessible and sustainable.
Despite some local opposition, there's growing public support for affordable housing options. Many Australians view higher-density living as a solution to the housing affordability crisis, leading to increased demand for apartments and townhouses in urban areas.
New zoning laws are expected to encourage higher-density housing developments in urban areas, making it easier for people to live near work and amenities. This shift is crucial as cities adapt to the growing population and housing needs.
As these changes unfold, potential property buyers should consider the benefits of living in areas with improved infrastructure and services, which are becoming more attractive due to these developments.
Sources: Business Council of Australia, Australian Bureau of Statistics, Phys.org
10) Adelaide’s inner suburbs will become more popular for their city access and suburban living balance
Adelaide's inner suburbs are gaining popularity because they offer a perfect mix of city access and suburban living.
With property prices in the city center soaring, the average house price hit $909,476 by June 2024, making the inner suburbs a more budget-friendly choice. This shift is drawing more people to these areas, where they can enjoy the perks of city life without the hefty price tag.
Public transport has seen significant improvements, thanks to Infrastructure Australia's focus on enhancing Adelaide’s Inner and Outer Ring routes. This has made commuting from the inner suburbs to the city a breeze, further boosting their appeal.
The inner suburbs are also becoming more vibrant with the development of new amenities. New cafes, restaurants, and mixed-use projects are popping up, making these areas lively and convenient places to live. This aligns with the Greater Adelaide Regional Plan's vision of creating neighborhoods where everything you need is just a short walk or cycle away.
These changes are transforming the inner suburbs into attractive spots for potential homeowners. The combination of improved transport, affordable housing, and a lively atmosphere is hard to resist.
As more people discover the benefits of living in Adelaide's inner suburbs, these areas are set to become even more desirable. The balance of city access and suburban charm is a winning formula for those looking to buy property.
Sources: Property Update, Infrastructure Australia, Greater Adelaide Regional Plan
15) Urban areas with strong public transport will attract more young professionals seeking properties
Young professionals are flocking to urban areas with excellent public transport links.
In places like Townsville, property prices are climbing because of a strong public transport system and a booming job market. This makes it a hot spot for young professionals looking for convenience and opportunity. Surveys highlight that younger adults, especially those working full-time or studying, are drawn to city life with easy transport access.
These young adults are more likely to use public transport for their daily commutes, reflecting a broader trend. The NSW Government's Transport Oriented Development Program is set to boost public transport infrastructure, aiming for high-density living near transport hubs by 2025. This initiative is designed to make urban living even more appealing.
According to Transurban’s Urban Mobility Trends Report, public transport usage among young professionals is on the rise. Concerns about congestion and transport costs are pushing this shift, along with a noticeable decline in car ownership among younger people. Urban planning is increasingly focused on sustainable development, favoring high-density areas close to transport hubs.
These changes are not just about convenience; they reflect a lifestyle choice. Young professionals are prioritizing locations where they can easily access work, leisure, and amenities without the hassle of car ownership. This trend is reshaping urban landscapes, making them more vibrant and connected.
Sources: Broker News, Charting Transport, NSW Planning, Transurban
16) Demand for larger homes will rise as multi-generational living becomes more popular
Multi-generational living is on the rise, and it's reshaping the housing market.
With an aging population, more families are living under one roof. From 2016 to 2021, there was a 22% increase in households with three generations. This trend is expected to grow as the population continues to age and the housing crisis remains unresolved.
High housing costs are pushing younger generations to stay with their parents longer. In 2021, a significant number of people in their 30s were still living at home, a notable jump from two decades ago. This financial strain is prompting families to pool resources, making multi-generational living a smart choice.
Cultural shifts are also influencing this trend. As cultural diversity expands, more families are planning for their children to stay home longer due to the rising cost of living. This has led to home designs that cater to multiple generations, with features like private areas for older kids or elderly parents becoming more popular.
For those considering buying property, it's worth noting that homes with flexible spaces are becoming more desirable. These homes often include separate living areas or additional suites, which can accommodate the needs of a multi-generational family.
As this trend continues, the demand for larger homes with adaptable spaces is likely to increase. This shift in living arrangements is not just a response to economic pressures but also a reflection of changing family dynamics and cultural values.
Sources: The Urban Developer, The McGrath Report 2025, Belvedere Living
17) City center luxury apartments will stay in demand for their convenience and amenities
Luxury apartments in city centers are still in high demand, even with challenges like rising interest rates.
In bustling cities such as Sydney, Perth, and Adelaide, luxury property values have soared. For instance, Sydney's top luxury market has seen a remarkable 26% increase over the past five years. This surge highlights a strong desire for upscale urban living.
People are increasingly drawn to the convenience and amenities of city life, which is evident in the growing demand for larger, high-quality developments. New luxury housing hotspots are emerging in smaller capital cities, reflecting this trend.
City centers offer a lifestyle that many find irresistible, with everything from fine dining to cultural attractions just a stone's throw away. The appeal of urban living is undeniable, and it continues to attract those seeking a vibrant and convenient lifestyle.
Despite economic fluctuations, the allure of city living remains strong. Luxury apartments provide not just a home, but a lifestyle, complete with top-notch amenities and prime locations.
As urban areas continue to develop, the demand for luxury apartments is expected to grow. These properties offer a unique blend of comfort and convenience, making them a top choice for many.
Sources: Ray White Inner Brisbane Apartments, Smart Property Investment
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.