Key takeaways
The monetary environment is shifting in favour of borrowers, which is typically positive for property values and market confidence.
Structural undersupply is worsening, which will place long-term pressure on both property prices and rental affordability—especially in the unit/apartment sector where most of the missing stock lies.
Investors focused on medium- to high-density stock in well-located areas could see significant upside, given the scarcity value this segment is likely to develop.
Investor sentiment is warming up again. The fear of missing out (FOMO) may begin creeping back in if supply remains tight and interest rates start falling further.
For seasoned investors, now may be the window to enter or expand before the broader market catches up.
Is the property market about to face a new challenge—or a fresh opportunity?
In this week’s Property Insiders chat, I’m joined again by Dr. Andrew Wilson, as we unpack the very latest in economic indicators and housing trends.
I ask him:
- Whether inflation is finally tamed—and what it means for interest rates
- About the worrying fall in building approvals and what’s really behind the housing supply crisis
- And the incredible resilience in auction markets, even as listings surge
Whether you're a seasoned investor or just trying to make sense of the market noise, this episode delivers the facts behind the headlines.
Inflation holds steady – no surprise rate rise ahead
The April inflation data shows a steady annual headline inflation rate of 2.4%, unchanged from March.
More importantly, underlying inflation nudged slightly higher to 2.8%, still within the RBA’s 2–3% target band.
Watch this week’s Property Insider chat as Dr. Andrew Wilson discusses some of the standout inflation drivers, including:
- Electricity prices, still down year-on-year due to subsidies, but the decline moderated from -9.2% to -6.5%
- Fuel prices, which fell further, from -7.6% in March to -12.0% in April
- Rents, up 5.0% over the year—still hot, but slightly down from March’s 5.2% annual increase
These numbers support the RBA’s recent decision to cut rates, as inflation is tracking well and cost-of-living pressures are easing in key areas.
All this is another green light for economic expansion—and housing.
Home building approvals slide – the supply crisis worsens
This is where the real worry lies.
In April, national home building approvals fell 5.8%, following a steep 9.1% drop in March.
Watch this week’s Property Insider chat as Dr. Andrew Wilson discusses the latest data:
- Detached house approvals rose slightly by 3.1%
- Unit approvals plunged 19.0%
- Western Australia was the outlier, with total dwelling approvals up 9.6%
And year-to-date comparisons show a grim national picture:
- Building approvals remain well below long-term averages
- Unit approvals are down 49% from their 2016 peak
- Overall capital city building approvals are down 30% since that same peak
Despite the sharp drop in new supply, population growth continues unabated.
We’re simply not building enough homes to meet demand, and that’s a major structural issue for affordability and rental stress.
The federal government has the ambitious target of building 1.2 million new homes between Jul 24 and Jun 29, which equates to building 20,000 new homes every month.
- Also read:Housing values continue to rise as growth trends converge across the capital cities | Latest Cotality Data
- Also read:Auction Report May 31st 2025 | Auction Markets Surge Over Final Week of Autumn
- Also read:May Home Prices Rise as Interest Rates Fall | Latest Housing Market Stats Dr. Andrew Wilson
- Also read:This week’s Australian Property Market Update – Latest Data, State by State May 27th 2025
- Also read:Perth housing market update | May 2025
In order to build those homes, you need to approve enough new homes for construction.
In reality, not everything will be completed, so you will need to approve more than 20,000 a month. As time progresses, other dwellings being approved will not be completed before the June 29 target.
In original terms, only 2,539 apartments were approved in April, a 17.38 per cent drop from the 3,073 approved in March. This means that 5,612 apartments were approved across March and April, compared with 8,625 approved across January and February.
Approvals for single-family homes rose by 3.1 per cent in April, in seasonally adjusted terms.
Property Council Group Executive Policy and Advocacy Matthew Kandelaars said the apartment market is still facing a challenging environment.
“While apartment approval numbers are volatile, this is two months in a row of significant falls,” he said.
“We will not meet our housing targets without the heavy lifting that needs to come from apartments that can deliver homes at scale close to transport, existing infrastructure and amenities.
“Even with approval in hand, it can take years for a project to start construction, held back by a tight labour market, high construction costs and complicated planning systems.
Auction markets defy gravity – demand still strong
The national auction market strengthened with increased clearance rates despite higher property listings last weekend.
Clearance rates rose compared to both the previous week and the same week last year.
Buyer demand remains solid ahead of the expected listing dip for the King’s Birthday long weekend.
These clearance rates are not just stable—they’re rising alongside listing volumes, which is a rare occurrence. It shows real buyer depth.
The data suggests demand is not just alive—it’s resilient.
Buyers are out there, sensing opportunity amid lower rates and improving affordability.
The takeaway: a market at a crossroads
We’re in an interesting spot: inflation under control, rate cuts already in place, buyers circling—but housing supply is still collapsing.
That makes for a classic setup:
- Short supply + improving affordability = price pressure
- Weak construction pipeline = long-term affordability crunch
- Rising auction activity = signal of confidence returning
For investors: The market is showing all the hallmarks of a tightening cycle.
That means fewer properties for sale, strong rental demand, and upward pressure on values. For those who act early, the opportunities could be substantial.
