The Australian property market continues to evolve, reflecting the diverse economic, social, and environmental landscapes all across the country. The year 2025 is shaping up to be a pivotal time for homebuyers and property investors as both capital cities and regional markets exhibit unique trends.
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The Big Picture of Australian Property Market in 2025
Australia’s real estate market remains a cornerstone of wealth for most of the Aussies, underpinned by a staggering $11.1 trillion in residential property value. However, while housing comprises 55.9% of household wealth, market dynamics vary starkly between urban capitals and regional hubs.
Regional NSW (New South Wales) property market has seen a change in dwelling values of (+3.2%) and for regional QLD (Queensland), the change is (+10.5%), according to CoreLogic. Whereas the regional VIC (Victoria) properties had a negative change in dwelling values of (-2.7%).
But according to SQM Research, the Victorian property market is expecting an uplift in 2025.
Capital Cities – Slow Yet Steady Recovery
Capital cities in the Australian property market like Sydney, Melbourne, and Brisbane witnessed mixed performance in the past year. According to CoreLogic, combined capital dwelling values decreased by 0.5% in Q4 of 2024, breaking a streak of recovery seen earlier in the year. Sydney, despite being Australia’s most expensive market, recorded a 1.4% decline in dwelling values over the quarter, leaving prices 1.4% below their peak in September 2024.
Australian Dwelling Values – Capital Cities (Corelogic)
What’s Driving the Trend?
- Affordability Constraints: Despite an overall price dip, affordability remains a challenge in Sydney in particular and some areas of Melbourne, where median house prices often exceed $1 million.
- Buyer Sentiment: The HPI report highlights increased median days on market (33 days nationally), indicating buyers are taking longer to make decisions.
- Rising Listings: Total listings in capital cities rose 3.8% year-on-year, providing more options but softening competition.
Regional Markets – The Underdog Shines
If capital cities have been treading water, regional markets are swimming ahead. CoreLogic’s data reveals a 1.0% rise in regional dwelling values in Q4 2024, with areas like Regional Queensland and Regional Victoria leading the charge.
Why Are Regional Markets Thriving?
- Lifestyle Migration: Post-pandemic, Australians are prioritising lifestyle. Regions like the Sunshine Coast and Ballarat offer affordability and liveability.
- Economic Diversification: Growth in tourism, agriculture, and renewable energy projects has bolstered job markets in these areas.
- Affordability: With regional property prices averaging 30-50% lower than capital cities, these markets remain highly attractive to first-time buyers and investors alike.
Comparing Capitals and Regionals
Rolling Annual Change in Dwelling Values:
- Capitals: +4.5%
- Regionals: +6.0%
Median Days on Market (Dec 2024):
- Capitals: 40 days
- Regionals: 29 days
Gross Rental Yields:
- Capitals: 3.5%
- Regionals: 4.4%
These numbers illustrate why regional markets are emerging as a lucrative choice for investors in property market in Australia seeking better rental returns and shorter sales cycles.
Key Trends to Watch in 2025
The Affordable Housing Push
Both the federal and state governments are ramping up affordable housing initiatives. However, approvals for new dwellings remain 11.7% below the decade average, with supply challenges continuing to constrain markets.
Rental Market Stabilisation
CoreLogic’s rental index showed a 4.8% annual increase, a significant cooling compared to the double-digit hikes seen in 2022 and 2023. Regional areas like Hobart experienced gross rental yields rising by 30 basis points, reflecting increasing demand.
Cash Rate Uncertainty
With the Reserve Bank of Australia (RBA) holding the cash rate steady at 4.35%, the market’s trajectory hinges on whether cuts occur in mid to late 2025. Investors should brace for volatility but remain optimistic as rates stabilise.
Key Advice for Home Buyers and Property Investors
For First-Time Buyers:
- Focus on Entry-Level Markets: Target lower-quartile properties, which saw a 9.9% annual growth.
- Government Schemes: Leverage first-home buyer grants and stamp duty concessions to maximise affordability.
For Seasoned Investors:
- Diversify: Look beyond Sydney and Melbourne. Brisbane and Adelaide are ripe for strong capital gains and rental yields.
- Monitor Market Timing: With an anticipated rate cut by the RBA, mid-2025 could offer lucrative buying opportunities.
For Off-Market Buyers:
- Stay Informed: Use tools like PropTrack’s off-market property tracker to identify hidden gems.
- Negotiate Wisely: With median vendor discounts tightening to -3.6%, realistic offers can close deals efficiently.
The Future Is Bright – Capital and Regional Markets Unite
While capital cities face affordability challenges, their long-term resilience makes them safe bets for investors. Regional markets, on the other hand, promise stronger immediate returns and lifestyle benefits. By aligning your strategy with these trends, you can turn 2025 into a year of property investment success.
Contact us to discover the opportunity of buying your very first investment property.
Read More: How to Effectively Evaluate House and Land Packages: Building Your Future, One Decision at a Time
Frequently Asked Questions (FAQs)
- What is the current state of the Australian property market in 2025?
The Australian property market remains diverse, with capital cities experiencing slight declines while regional markets show growth. Regional dwelling values increased by 1.0% in Q4 2024, reflecting strong demand. - How do regional property prices compare to capital cities?
Regional properties are 30-50% more affordable than capital cities, making them a popular choice for first-time buyers and investors. - What are the median days on market for properties in Australia?
As of December 2024, the median days on market were 40 days for capital cities and 29 days for regional areas, indicating quicker sales in the regions. - Are rental yields better in regional areas?
Yes, gross rental yields in regional markets are around 4.4%, compared to 3.5% in capital cities, offering better returns for investors. - How has the cash rate impacted property markets?
The RBA’s cash rate of 4.35% has slowed market activity. Anticipated rate cuts in 2025 may stimulate buyer interest. - What is driving growth in regional markets?
Lifestyle migration, economic diversification, and affordability are key drivers of growth in regional markets. - What government schemes can first-time buyers use?
First-time buyers can access grants and stamp duty concessions, which make entry-level properties more affordable. - How do vendor discounts compare across markets?
Median vendor discounts tightened to -3.6% nationally, showing sellers are realistic in pricing. - Are there risks in investing in regional properties?
While regional markets offer better yields, investors should assess economic stability and infrastructure development before buying. - How can I find off-market property opportunities?
Using tools like PropTrack’s off-market property tracker can help you identify opportunities before they hit the broader market.
