Authored by the expert who managed and guided the team behind the Australia Property Pack
Everything you need to know before buying real estate is included in our Australia Property Pack
Are you curious about the future of the Australian property market? Wondering which trends will shape your buying decisions in 2025? Eager to know how these trends could impact your investment strategy?
We will lay down recent insights, ici no guesswork, we rely only on solid data.
Actually, we know this market inside and out. We keep tabs on it regularly, and all our discoveries are reflected in the most recent version of the Australia Property Pack
1) Foreign buyers will flock to Australian properties as the government eases 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
2) Chinese investors will flood back into the Australian property market as diplomatic ties strengthen
Chinese investors are once again eyeing the Australian property market, thanks to improving diplomatic relations between the two countries.
In recent years, particularly in 2023, there was a noticeable uptick in Chinese tourists visiting Australia, with over 550,000 arrivals that year. This surge, especially in December, signals a growing interest and confidence in Australia as a destination. It's not just about tourism; it's a sign that Chinese investors are warming up to the idea of investing in Australian real estate.
During the July-September 2023 quarter, Chinese buyers made a splash by spending $700 million on residential properties across 523 transactions. This activity highlights their leading role among international buyers in the Australian real estate market, even with some minor fluctuations. It's clear that Chinese investors are still very much in the game.
The backdrop to this renewed interest is the improved diplomatic relations and trade agreements between China and Australia. Since late 2022, both countries have been working hard to strengthen their partnership, with high-level government talks taking place in September 2023. These discussions have focused on trade, investment, and regional security, creating a more welcoming environment for Chinese investment.
Looking back, historical data shows that Chinese investment in Australian property tends to peak when diplomatic ties are strong. In 2023, Chinese buyers purchased $3.4 billion worth of approved residential real estate, marking a 40% increase from the previous year. This pattern underscores a sustained interest in stable, long-term assets in Australia.
As diplomatic relations continue to improve, it's likely that Chinese investors will maintain their interest in the Australian property market, seeking opportunities in a stable and welcoming environment.
Sources: Property Update, Trade Minister, China Briefing, Prime Capital
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3) Hobart's property market will cool, balancing prices after years of rapid growth
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 property prices will rise as demand outstrips 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 property prices will drop 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) Australian coastal towns will see a sharp rise in property prices as people seek lifestyle changes post-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 drop due to high property prices making strong returns difficult to achieve
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 rental yields will stabilize 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
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9) New zoning laws will boost high-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 boom offering 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
11) Eco-friendly homes will dominate as Australians prioritize environmental responsibility
Eco-friendly homes are becoming a hot trend in Australia as people grow more environmentally aware.
In recent years, there's been a noticeable surge in Green Star certifications, a sign of sustainable building practices. This trend, highlighted by the Green Building Council of Australia, shows an 80% increase in certifications, pointing to a strong move towards eco-friendly construction. More Australians are choosing homes that are not just houses but a commitment to a greener future.
The market for sustainable building materials is also on the rise. The Australian Construction Materials Market is expected to grow, thanks to government investments and a shift towards eco-friendly materials. This growth indicates a wider acceptance and demand for sustainable options in home building, making it easier for buyers to find eco-friendly choices.
Government incentives are a big part of this shift. In 2023, the Federal budget dedicated significant funds to boost energy efficiency in homes. This financial support makes eco-friendly homes more attractive to buyers, offering a chance to save money while reducing their carbon footprint.
These incentives are not just about saving money; they reflect a broader commitment to green building practices. Homeowners are increasingly drawn to the idea of living in a house that aligns with their values, thanks to the financial benefits and environmental impact of these government programs.
As Australians become more conscious of their environmental impact, the demand for eco-friendly homes is expected to keep growing. This trend is not just about individual choices but a collective movement towards a more sustainable future.
Sources: Green Building Council of Australia, 6Wresearch, RACE for 2030
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12) Immigration will surge housing demand in major Australian cities as borders reopen
In 2023 and 2024, immigration significantly shaped Australia's housing market in major cities.
After the borders reopened in February 2022, Australia saw a net overseas migration of 446,000 people in the 2023-24 financial year. This influx, although slightly less than the previous year's record, was still a major driver of population growth. As more people arrived, the demand for housing in urban areas surged, especially in cities like Sydney and Melbourne, where job opportunities are plentiful.
Historically, Australia has always attracted more migrants than it has lost, contributing to a steady population increase. The COVID-19 pandemic briefly paused this trend due to border closures, but the reopening led to a rapid increase in migration. This wave of new arrivals has been a key factor in the rising demand for housing in major cities, as migrants typically settle in urban areas.
The Australian government's Permanent Migration Program, targeting 185,000 places for 2024-25, focuses on skilled migrants. This policy highlights the strategic role of immigration in boosting economic growth. With a focus on skilled workers, the program is expected to further drive housing demand in cities where job prospects and cultural amenities are attractive.
In cities like Brisbane and Perth, the influx of skilled migrants is not just about numbers; it's about the quality of life and opportunities they seek. These cities offer a blend of lifestyle and career prospects, making them popular choices for new arrivals. As a result, housing markets in these areas are experiencing increased pressure to accommodate the growing population.
As Australia continues to welcome more migrants, the housing market in major cities is expected to remain competitive. The combination of government policies and the natural appeal of urban centers ensures that immigration will keep boosting housing demand in the foreseeable future.
Sources: Australian Bureau of Statistics, Forecast Global, Newland Chase, Australian Parliament House
13) Australia's aging population will boost demand for smaller accessible housing options
Australia's population is aging, and this shift is reshaping the housing market.
In recent years, the number of Australians aged 65 and over has surged, and by 2066, they could make up nearly a quarter of the population. This demographic change is not just about numbers; it's about how people live. As more Australians live longer, the over-85 age group is expected to triple, leading to a rise in single-person households, often due to widowhood. This naturally increases the demand for smaller, more accessible homes that are easier to manage.
Government reports emphasize the need for age-friendly housing. The Australian Bureau of Statistics suggests that by 2042, people aged 85 and over could represent 3% of the population. This growing group will need homes with features that promote accessibility and safety, like universal design elements. These features are not just about convenience; they are essential for maintaining independence and quality of life.
Older Australians are showing a clear preference for downsizing. Surveys reveal that they favor moving to more manageable living spaces, and this is reflected in the real estate market. Sales of smaller homes and apartments are on the rise, catering to the practical needs of an aging population. These housing options offer financial perks too, such as lower maintenance costs and reduced utility bills, making them an attractive choice for retirees.
For those considering buying property in Australia, understanding these trends is crucial. The demand for smaller, accessible homes is not just a passing phase; it's a response to a significant demographic shift. Investing in properties that cater to this market could be a smart move, as the need for such housing is only set to grow.
As the population ages, the housing market will continue to evolve. Properties that offer accessibility and ease of maintenance will likely see increased demand, driven by the needs of older Australians seeking comfort and practicality in their living arrangements.
Sources: Australian Bureau of Statistics, Time, Healthy Active by Design, Housing Industry Association, Australian Institute of Health and Welfare
14) Property tax law changes will reshape investor strategies in high-demand areas
Changes in property tax laws are shaking up how investors approach buying in high-demand areas.
In recent years, especially around 2023 and 2024, Australia tweaked tax rules like negative gearing and capital gains tax, aiming to make homes more affordable and ease the housing crunch. These adjustments have had a noticeable impact on investment returns, pushing investors to rethink their strategies. For example, stricter rules and extra taxes for foreign buyers were introduced to keep more homes available for Australians.
Foreign investors now face a 15% final MIT withholding tax rate on income and gains from residential properties starting in 2025. This change is significant because it can deter foreign investment, which in turn affects the number of transactions in high-demand areas. Investors are now more cautious, and some are even pulling back from the market.
Interestingly, about 60% of Australia's property investors use negative gearing, relying on tax breaks to make their investments work. When these concessions change, as they have in the past, investors often need to adjust their strategies. This might mean looking at regions with better tax conditions or tweaking their portfolios to cut down on tax bills.
These tax law changes are not just numbers on paper; they have real-world effects. Investors are now more strategic, considering how to navigate these new rules to maximize their returns. Some are even exploring opportunities in less regulated areas or diversifying their investments to spread risk.
For those thinking about buying property in Australia, it's crucial to understand how these tax changes could affect your investment. Whether you're a local or a foreign buyer, staying informed and adaptable is key to making the most of your investment in this evolving landscape.
Sources: Austaxpolicy, Unconditional Finance, Deloitte
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15) Young professionals will flock to urban properties with strong public transport links
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) Multi-generational living will rise driving demand for larger homes
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
This article gives you valuable insights, but remember, it’s not and will never be investment advice. We pull data from a range of sources to provide you with the most accurate picture possible, yet we can’t guarantee complete accuracy. Markets are difficult to predict. Make sure to do your own research and consult a professional before making any financial moves. Any risks or losses are your own responsibility.