As the Australian housing market 2025 continues to unfold, buyers, investors and renters alike are closely watching shifts in supply, pricing and demand across major cities. With interest rate stability on the horizon and population growth putting pressure on housing stock, the next 12 months are shaping up to be pivotal.
CoreLogic’s latest data reveals that Australian home values rose 0.6 percent in June 2025, marking the sixth consecutive monthly increase. This brings the national median dwelling value to just over $758,000, closing in on the record highs seen in late 2021.
Brisbane and Adelaide have led the recent surge, each reporting quarterly gains of more than 2.5 percent. Perth has also maintained strong growth, fuelled by low stock levels and continued migration. In contrast, Sydney and Melbourne are showing more modest increases as higher property values and cost of living pressures weigh on demand.
“While growth has returned, it’s uneven across regions and segments,” said Eliza Owen, Head of Research at CoreLogic. “Affordability remains a constraint, especially in the major east coast cities, but there’s no question that confidence is returning to the housing sector.”
One of the key drivers behind the market’s renewed momentum is the Reserve Bank of Australia’s decision to pause interest rate hikes in early 2025. After raising the cash rate from 0.1 percent to 4.35 percent between 2022 and 2024 to curb inflation, the central bank has now signalled a more cautious approach.
This has created a sense of stability for both buyers and lenders. Mortgage repayments are still high, but they are no longer increasing month after month. Fixed rate loans from 2021 have mostly expired, and households have begun adjusting to the new interest rate landscape.
The RBA’s July 2025 statement reinforced its wait and see stance, noting that inflation is gradually returning to its 2 to 3 percent target band. As a result, economists suggest that rates are unlikely to increase further this year, which could support further buyer activity.
While first home buyers remain active in some affordable suburbs and regional centres, property investors are becoming increasingly prominent once again. According to the Australian Bureau of Statistics, investor lending rose 3.8 percent in May and is up 9 percent year on year.
Rental yields remain attractive in several markets. Perth, Brisbane and Adelaide are reporting gross yields of more than 5 percent on average, driven by tight vacancy rates and rising weekly rents. This return to profitability is encouraging seasoned investors to expand their portfolios, while some new entrants are looking to secure long term returns through capital growth and rent increases.
However, regulatory scrutiny is also on the rise. Several state governments are introducing or debating rental caps, land tax reforms and tenancy protections, which could affect investor decision making over the coming months.
Despite the uptick in buyer demand, Australia’s housing supply remains constrained. The construction sector is still grappling with labour shortages, inflated material costs and a backlog of delayed projects from the COVID era.
According to the Housing Industry Association (HIA), new home starts fell 6.2 percent in the March 2025 quarter. Apartment developments in particular have slowed, with developers citing financing challenges and planning delays as major obstacles.
The federal government’s Housing Accord aims to deliver 1.2 million new well located homes over five years, beginning in mid 2024. However, industry experts say progress has been slower than anticipated.
“There’s a real risk that undersupply will worsen housing affordability over the medium term,” said HIA Chief Economist Tim Reardon. “Governments need to focus on unlocking land, speeding up approvals and supporting builders facing financial stress.”
Regional property markets, which surged during the pandemic due to remote work trends, have generally retained much of their value. Although growth has slowed since the 2020 to 2022 peak, towns in coastal New South Wales, South East Queensland and parts of Victoria continue to draw interest from lifestyle buyers and retirees.
Price corrections have occurred in some locations where demand was driven by temporary population shifts or speculative purchases. However, areas with strong local economies, infrastructure investment or tourism appeal have proven resilient.
For example, the Sunshine Coast and Newcastle have both seen median house prices increase by more than 4 percent in the past year, supported by continued interstate migration and upgraded transport links.
Affordability remains one of the biggest challenges in the market. Despite some wage growth and stabilising interest rates, homeownership remains out of reach for many Australians. The latest Demographia International Housing Affordability report ranked Sydney as the second most unaffordable city in the world, just behind Hong Kong.
Government support schemes such as the First Home Guarantee and Help to Buy are helping some buyers get a foot on the ladder. However, rising living costs and stagnant household savings are keeping demand subdued in key price brackets.
There is also concern that the current upswing could reignite speculative behaviour, putting further pressure on already stretched borrowers.
With strong demand returning in certain pockets and supply still constrained nationwide, the Australian property market is in an unusual position. Confidence is rising, yet risks remain on the horizon.
Migration levels are at record highs, fuelling long term demand for housing, especially in capital cities. At the same time, high construction costs and planning bottlenecks limit the rate at which supply can respond. This imbalance could continue to drive prices upward, especially in affordable, high growth areas.
Policy shifts and global economic movements will also shape the market’s direction. Any future changes to interest rates, tax policy, or migration settings could have flow on effects for housing affordability, rental markets and buyer sentiment.
Looking ahead, most analysts anticipate modest but steady growth through the remainder of 2025 and into 2026. Brisbane, Adelaide and Perth continue to lead the national charge, supported by population growth, infrastructure investment and relative affordability.
Meanwhile, buyers in Sydney and Melbourne will likely face tighter lending conditions and stiffer competition. Unit markets, regional areas and emerging fringe suburbs may become the focal points for price sensitive purchasers.
Whether this current momentum can be sustained will depend heavily on housing supply, construction activity and the Reserve Bank’s next moves. For now, the data signals that Australia’s housing market has decisively turned a corner. All signs point to a competitive landscape for the foreseeable future.
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