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Ahmad Imam Square Wide Lo Rez 400.jpgtim Lawless
By Tim Lawless
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Australian housing market update | May 2025

key takeaways

Key takeaways

Australian housing market growth is moderating due to economic uncertainties and affordability pressures

Mid-sized capitals (Brisbane, Adelaide, Perth) continue to outperform larger cities in terms of property price growth

Rents continue to rise faster than property values, improving yields

The Australian housing market demonstrated moderate growth through April 2025.

While February's rate cut initially boosted market sentiment, recent uncertainties—including the federal election and Trump's tariff announcements—have tempered confidence and slowed momentum.

National Housing Market Update | May 2025

Housing values rose 0.3% in April, slightly lower than March’s 0.4%, suggesting some loss in the momentum initially gained from the February rate cut.

Annual growth has slowed significantly to 3.2%, highlighting the market’s gradual transition to a steadier pace.

The rental market remains robust, with rents rising steadily, though annual rental growth has moderated considerably.

Australian Property Markets in April 2025

The performance across Australian capital cities remains mixed.

Brisbane, Adelaide, and Perth continue to hit record highs, indicating resilience in mid-sized markets, while Sydney, Melbourne, and Hobart remain below their peak values, suggesting these markets are still in recovery.

Change in house prices across the capital cities:

Capital City April Change vs. Peak Values
Sydney +0.2% -1.1%
Melbourne +0.2% -5.4%
Brisbane +0.4% Record High
Adelaide +0.3% Record High
Perth +0.4% Record High
Hobart +0.9% -11.1%
Darwin +1.1% -2.7%
Canberra +0.4% -6.4%

Source: Cotality Australia

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Note: Brisbane, Adelaide, and Perth are showing notable stability, whereas larger markets like Sydney and Melbourne are experiencing slower recoveries.

Housing affordability continues to be a critical challenge, with the dwelling value-to-income ratio and home loan serviceability at record highs. Renters also face increasing pressures, dedicating a substantial portion of their income to housing costs.

  • Dwelling Value-to-Income Ratio: At historic highs
  • Home Loan Serviceability: Record high, requiring around 10.6 years on average to save for a 20% deposit
  • Median Rent Affordability: Rental households now dedicate approximately 33% of their pre-tax income to rent
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Note: Affordability issues persistently limit the market's growth potential and pose significant hurdles for first-time buyers.

The rental market remains healthy overall, but growth has slowed significantly. Notably, Darwin and Hobart have experienced the strongest rental growth in the past year.

  • Highest Annual Rental Growth: Darwin units (+7.3%), Hobart units (+7%) and houses (+5%)
  • Slowing Rental Growth: National annual rental growth rate now at 3.6%, significantly down from 8.3% one year ago

Looking Ahead: Property Market Outlook

Looking ahead, the Australian housing market is likely to continue experiencing moderate, sustainable growth.

Government initiatives targeting first-time buyers will influence market dynamics, while ongoing undersupply issues will maintain upward price pressures.

  • Moderate housing value growth is expected to continue through 2025.
  • Affordability constraints and cautious lending will limit growth potential.
  • First home buyers to benefit from new stimulus measures.
  • Persistent undersupply expected to sustain upward price pressures.

Overall, the Australian property market remains resilient amid evolving economic and political conditions.

Buyers and investors should closely monitor developments, particularly around interest rates and housing policy announcements.

Ahmad Imam Square Wide Lo Rez 400.jpgtim Lawless
About Tim Lawless Tim is Research Director at Cotality (formerly CoreLogic), analysing real estate markets, demographics and economic trends across Australia. Visit www.corelogic.com.au
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