The Trump tariffs may or may not liberate the US economy but they could have lasting implications for the Australian economy, interest rates and property market.
It’s a confusing time to be an RBA Governor.
The United States’ application of blanket tariffs around the world has sent shockwaves through the global economy that will reverberate all the way through Australia’s economy and down to the national property market.
For Michele Bullock, at the helm of the Reserve Bank of Australia, deciding how to react to this chaotic economic landscape is far from clear-cut.
For the past couple of Monetary Policy Decisions that follow interest rates announcements, the RBA has been firm in its assertion that the global economic uncertainty lavished upon the world by Donald Trump’s unpredictability and tariff threats will deter it from cutting rates too quickly.
Prospective property buyers and homeowners with a mortgage are eagerly awaiting Ms Bullock’s reading of the situation.
The RBA’s view, up to now, has been that tariffs would add to the cost of goods, leading to inflationary pressure, and therefore negating the argument in favour of interest rate cuts.
It sounds simple enough. So why are markets now raising their collective expectations of an interest rate cut, not just on 18 May, but also another by August, and a third by November?
Before Trump launched a global trade war on Thursday (3 April, Australian time) financial market pricing had suggested there was a 70 per cent chance that the RBA would cut rates at its next get-together, after it held steady on 1 April.
But after the tariff plan was announced, those odds leapt to 90 per cent.
The reason? Well, countering the inflation theory is the one that sees the global economy lurching towards deflating growth or even recession. Outside the US, whose consumers are the ones footing the bill for the tariff explosion, the economic slowdown as trade volumes take a hit will slow global growth and, as a result, suppress inflation.
Bendigo Bank’s Chief Economist David Robertson acknowledged the juggling act facing the RBA Governor.
“Uncertainty around the impact of the tariffs makes the job of setting the cash rate much more complex,” he said.
“Australia is one of the least exposed to tariffs directly, given less than 5 per cent of our goods exports head to the US, so it will be indirectly, via our major trading partners, that we are likely to be most impacted.”
“Will global demand slow down sharply, meaning all the more need for RBA rate cuts?
“Recent forecasts from the RBA and the OECD do show slower growth ahead in the US and to a lesser extent the global economy, but not at this stage a slowdown for our major trading partners,” Mr Robertson said.
“This will be a key variable for the rest of the year and will depend on the degree to which countries retaliate to US tariffs, or perhaps seek more reliable trade partners elsewhere.”
Australia’s property market has already returned to a couple of months of capital growth following a few months of modest declines that put an end to a record breaking spell of median dwelling value increases.
That rate of growth could again take off if borrowers sense loan repayment pressures are about to ease. Investors in particular will be eyeing the gains to be made from mortgage savings when rents still continue to rise.
Rest of world leaning to rate cuts
If the RBA is seeking guidance from around the world, it will note that central banks elsewhere appear to be erring on the side of stagflation rather than rampant inflation, in a post-tariff world.
Investors in the UK are increasing their bets on interest rate cuts by major central banks in an effort to stave off a potential global recession. Futures markets suggest a reduction of approximately 60 basis points (bps) to the Bank of England’s benchmark Bank Rate by December. This marks an increase from the 54 bps expected just a day earlier.
In the Eurozone, investors have increased their bets on another rate cut on 17 April and now see a roughly 90 per cent chance of a downward move, to be followed by two more cuts later in the year, as inflation pressures dwindle as tariffs damage the economy.
The likelihood of the Bank of Japan, where a 24 per cent tariff was imposed by the Trump administration, pausing interest rate hikes is also increasing.
The China effect
No discussion about Australia’s economy in a global context is complete with a consideration of what the fallout will be in China.
The direct effects of the 10 per cent tariff on Australian goods exported to the US is likely to be small. The US is Australia’s fifth largest goods export market, with exports worth $34 billion in the 2023 calendar year. But that is overshadowed by $218 billion worth of exports to China and the noteworthy $90 billion worth to Japan.
China has copped a massive 54 per cent tariff imposition. The trade numbers between the US and Chinese economic behemoths are quite staggering. The US-imported goods from China in 2024 totalled $438.9 billion, up 2.8 percent ($12.1 billion) from 2023.
The saying used to be that if the US coughed, Australia caught a cold. Today, it’s more like, if China catches a cold, Australia is hospitalised with pneumonia.
China buys 32.5 per cent of everything Australia exports and is the clear number one trading partner. If the economy there shrinks, so does Australia’s. Japan is the second largest export market, at less than half the value of China’s expenditure.
Not only that, but Vietnam copped a 46 per cent tariff hit, Thailand 37 per cent, Taiwan 32 per cent, Malaysia 24 per cent and Bangladesh 37 per cent (while impoverished Cambodia was somewhat bizarrely slammed the hardest of all nations with a 49 per cent tariff).
Just as Australia said it would do, so too will the economies of southeast Asia.
Among the responses in Prime Minister Anthony Albanese’s five point plan for countering American tariffs, he said his government would provide $1 billion in zero interest loans for firms to take advantage of new markets and export opportunities.
The RBA will (presumably) be factoring in that other countries in our region will also be looking to unload their goods in markets outside the US, including Australia.
A flood of cheaper goods into Australia from southeast Asia would dampen inflation further.
And with that, likely hasten a round of interest rate cuts and subsequently add further fuel to a property market that has been teetering on the parapet between growth and price decline.
The ball is in Michele Bullock’s court.
Article Q&A
What do the Trump tariffs mean for the Australian property market?
Prospective property buyers and homeowners with a mortgage are eagerly awaiting the RBA’s reading of the tariff situation. Finance markets are now raising their collective expectations of an interest rate cut, not just on 18 May, but also another by August, and a third by November, which could fuel property markets.
How are central banks responding to the tariff increases?
Central banks elsewhere appear to be erring on the side of stagflation rather than rampant inflation, in a post-tariff world. Investors in the UK are increasing their bets on interest rate cuts by major central banks in an effort to stave off a potential global recession, while Europe and Japan are also betting on downwards inflation pressure.
Rental reform is on government agendas but changes need to factor in the supply of properties for renters being provided by investors, writes new REIWA President Suzanne Brown in her first exclusive API Magazine column.
As we head into a federal election on 3 May, the usual debate about negative gearing and capital gains tax has raised its head.
With the nation in the midst of a rental crisis, a sensible approach to rental reform – whether that’s tax settings or tenancy legislation – is needed. Otherwise, we risk losing more investors from the market, deterring potential investors, and perpetuating the current situation.
We know investors are sensitive to legislative change. In Western Australia we’ve seen the impact this can have on the market.
For example, the Covid rental legislation enacted in 2020-21 was deeply unpopular with investors. It came after a long market downturn in which rent prices declined significantly and vacancies were high.
While other factors also came into play, this policy, and potential changes to the Residential Tenancies Act, played a role in a mass exodus of investors from the market in a fairly short period of time. This reduced rental supply by nearly 9 per cent, or 20,000 properties, and contributed to the rental crisis of the past few years.
You can also see the result of legislative change in other states, such as Victoria, which has reduced land tax thresholds for investors as part of the Covid debt levy and introduced strict regulations for landlords, including high compliance requirements.
According to the Homes Victoria Rental Report for the September 2024 quarter, the number of active bonds in that state declined by 3.6 per cent, or nearly 25,000 properties, between September 2023 and September 2024.
Respondents to a recent REIWA housing survey indicated changes to property taxes (83 per cent) would influence their decision to sell their investment property.
While changes to capital gains tax and negative gearing were often cited as deterrents by investors, land tax was also a concern. One investor noted they recently sold a tenanted property as their land tax had increased from $12,500 to $28,000 in three years.
Almost three quarters (74 per cent) of respondents said changes to legislation would influence their decision to sell their investment property.
One respondent commented they had recently sold two investment properties due to over-governance. Another said changes to the Residential Tenancies Act had seen them sell three investment properties in the past five years.
Changes to property taxes (82 per cent) and changes to legislation (62 per cent) would also deter potential investors.
Property investors ‘will exit the market’
Investors are often vilified, but we all need to remember they provide an essential service. About 85 per cent of rental properties are provided by private investors. While some own several properties, according to ATO data, about 71 per cent own one, with 19 per cent owning two.
Until there is another way of providing enough rental properties to meet demand, we need to have balanced and stable policy settings that support existing investors and encourage new investment.
The current improvement of the WA rental market is due to an increase in new supply.
While WA’s relatively affordable housing and the potential for strong rental yields have played a key role in attracting investors, particularly those from the Eastern States, so too has our more moderate legislative environment.
Another review of our Residential Tenancies Act is expected later this year or early next year and the Western Australian government cannot afford to be complacent when it comes to future rental reform.
WA’s population is still growing and rental supply has not returned to its previous high. The feedback from investors is clear. They can and will exit the market if they have concerns about legislation and we could very easily find ourselves facing the same challenging conditions experienced over the past few years.
At the federal level, political parties need to carefully consider changes to tax settings or any form of rent controls and the potential effect on the constrained rental markets across the country.
Article Q&A
Who provides the most rental properties in Australia?
About 85 per cent of rental properties are provided by private investors. While some own several properties, according to ATO data, about 71 per cent own one, with 19 per cent owning two.
Are legislative changes deterring property investors?
A REIWA survey found that almost three quarters (74 per cent) of respondents said changes to legislation would influence their decision to sell their investment property.
On the verge of a federal election and with global and domestic economic uncertainty swirling around the imposition of US tariffs, the RBA has acted with caution in keeping interest rates on hold.
The Reserve Bank of Australia (RBA) has resisted any temptation to deliver a second successive interest rate cut, leaving the official cash rate at 4.10 per cent on Tuesday (1 April).
Household spending has been a concern of the RBA and the release of Australian Bureau of Statistics (ABS) data earlier in the day showing household spending rising for a second successive month has only added weight to RBA Governor Michele Bullock’s cautious stance.
Australian retail turnover rose 0.2 per cent in February 2025, according to seasonally adjusted ABS figures following a rise of 0.3 per cent in January 2025.
With trimmed mean inflation, the RBA’s preferred measure, at 2.7 per cent and within its preferred band of 2 to 3 per cent, there is some external pressure to give borrowers a reprieve. The headline Consumer Price Index (CPI) figure is at 2.4 per cent.
But global economic uncertainty around the United States’ proposed suite of extensive tariffs has central banks around the world on edge, wary of its potential to fuel global inflation as tit-for-tat tariffs are implemented and raise prices.
While not an economic factor it would admit to considering, presenting itself as apolitical may have weighed on the minds of some RBA board members with a federal election only weeks away.
Ms Bullock confirmed that the 1 April rates decision was more about the unknowns than what has actually transpired.
“Recent information suggests that underlying inflation continues to ease in line with the most recent forecasts published in the February Statement on Monetary Policy, nevertheless, the Board needs to be confident that this progress will continue so that inflation returns to the midpoint of the target band on a sustainable basis.
“It is therefore cautious about the outlook,” the Monetary Policy Decision statement noted.
“The Board noted that monetary policy is well placed to respond to international developments if they were to have material implications for Australian activity and inflation.”
When will the next rate cut come?
The latest decision came as no real surprise, with almost all economic observers tipping a hold at Tuesday’s meeting.
But there was shift in sentiment around expectations of a rate cut at the next RBA Board meeting on 20 May.
Market pricing for another rate cut in May slipped, pointing to a 75 per cent chance of a reduction in rates next month, compared to 85 per cent ahead of the announcement.
Sean Langcake, Head of Macroeconomic Forecasting for Oxford Economics Australia, said that underlying inflation is headed in the right direction but the monthly indicator does not give enough confidence to make a policy move, especially as it underweights information about services inflation.”
A rate cut might be some way off, he said.
“Absent a change in the RBA’s forecasts, or a bout of weakness in the economy due to global factors, we think the Bank will keep policy unchanged until Q4 of this year.”
“The turbulence in the global economy is clearly front of mind for the Board.
“The Australian economy is relatively well placed to weather the direct impacts of the ongoing escalation in tariffs, globally, however, heightened uncertainty and weaker business confidence were highlighted as potential headwinds to growth.”
“The big elephant in the room is Trump’s tariffs.”
– Dr Isaac Gross, Monash Business School
The Real Estate Institute of Queensland (REIQ) has argued that a May rate cut would make economic sense.
Antonia Mercorella, CEO, REIQ, said households would welcome additional relief after suffering a significant fall in real disposable income over the last two years.
“There have been signs of sluggishness in the private sector economy and a rate cut would help improve the outlook for businesses.
“Additional rate cuts are required to lift consumer confidence and borrowing capacity.
The RBA will gain some valuable data with which to inform its mid-May meeting when the ABS releases the consumer price index for the March quarter on 30 April.
The decision to keep rates on hold might rein in capital growth over the next month or two but market sentiment does appear to be improving.
Knight Frank’s Chief Economist, Ben Burston, said the likelihood of a rate cut next month would add a boost to the residential property market.
“Since the first rate cut in February, we have witnessed a broadening in investor demand and with further cuts in prospect, investors still on the sidelines will increasingly come to the view that the Australian market now represents good value with strong prospects for cyclical recovery.”
Knight Frank’s Australian Horizon 2025 report launched at the end of last year predicted that the Australian commercial property market would experience a recovery from the middle of this year, with a return to growth.
“Well-located core assets in Sydney are expected to lead growth, with industrial first, followed by prime CBD offices.
“The Knight Frank report found the strength of the cyclical market recovery will be guided by the extent of interest rate cuts once the RBA started easing monetary policy,” Mr Burston said.
The Trump factor remains the great unknown.
Dr Isaac Gross, Department of Economics, Monash Business School, said January’s inflation numbers were very low, and if that were to be repeated in late April’s numbers, interest rate cuts would follow quickly.
“The RBA is still concerned that they might have been a one-off result and so will wait until their next meeting in May before committing to another cut.
“The big elephant in the room is Trump’s tariffs (due to be announced this week).
“Nobody knows how big they will be, who they will target and if other countries will retaliate but the RBA will be watching carefully to see if this tariff tiff poses a substantial risk to the Australian economy.”
On 3 May Australians will go to the polls to elect their next federal government but which political party, if any, has a meaningful contribution to make in tackling property unaffordability and the housing crisis?
Somewhere behind the much repeated mantra of ‘reducing the cost of living’, housing is high on the agenda as a hot button topic for the election that will take place on Saturday 3 May.
Campaigning for the newly announced federal election has gone into overdrive but do either of the main political parties have any big ideas to tackle such an entrenched affordability and housing supply crisis?
Anthony Albanese’s Labor is dangling an additional $5 a week in tax savings if you’re willing to wait more than a year for it to take effect.
Peter Dutton’s Liberal party is trying to buy its votes with a fuel excise reduction that experts say would save the average household a similar $5 amount per week.
Both borderline insulting key policies would be massively overwhelmed by inflation before they even came to fruition.
Does any party have housing solutions?
So where are the big ideas? When it comes to the property market, not really anywhere, is the short answer.
Politically contentious issues like negative gearing, which many experts suggest would lead to a possible decrease in demand for investment properties and a subsequent improvement in affordability, are off the table.
The centrepiece of the Liberal Coalition’s housing policy is to reduce immigration, scrap Labor’s $10 billion Housing Australia Future Fund (HAFF) and prevent foreigners from buying property in Australia. Mr Dutton would also allow Australians to spend savings in their compulsory workplace pension funds on down payments to buy new homes.
For its part, Labor admits barely any new homes have eventuated from HAFF but insists it is still “the single biggest investment to support social and affordable housing in more than a decade,” with the aim of building 30,000 (of an overall “pipeline” of 55,000) “social and affordable” homes over five years.
The Albanese government has announced it will grow its housing support budget to $33 billion.
It will raise the income and price caps for its Help to Buy scheme through which potential purchasers receive up to 40 per cent of the price of a home through its shared equity loan scheme. They pay it back only when they sell. For first-home buyers, Labor has also pressured banks to exclude HECS debt from mortgage application calculations.
Neither major party has captured the imagination of the public. Around a third of voters choose alternative candidates.
The Greens are running on arguably the biggest policy ideas of the electoral campaign period, with rent freezes, negative gearing and capital gains tax reform in their sights.
Greens Treasury spokesperson Nick McKim has said he wants banks to offer a discount mortgage called HomeKeeper to all home owners, including first-home buyers and owner-occupiers.
‘More homes at less expense’
Professor Nicole Gurran of the Sydney School of Architecture, Design and Planning, suggested there were more slogans than cement in the policies put forward so far.
“The electorate is primed for genuine housing solutions and the evidence shows this should include greater investment in social and affordable housing, nationwide rental protections, and a fairer tax system.
“Younger people are disenfranchised by high rents and fading hopes of home ownership, parents are fearful for their children’s futures and many older-aged renters are facing retirement without housing security.
“But history suggests that we are in for a repeat of simple slogans about the problem of supply that don’t address structural barriers to new and affordable housing production.
“Nor will we make home ownership more attainable without genuine reform to demand-fuelling tax incentives, which pump prime the value of existing housing stock without delivering new or affordable homes for lower income renters or aspiring first home owners.”
Property Council Chief Executive Mike Zorbas said national housing policy must prioritise streamlining investment and planning processes to get more homes out the ground at less expense.
He also rebutted the Coalition position on migration.
“Building world-class communities takes too long in Australia; pipelines of land often take up to a decade to achieve the necessary planning and environmental approvals and navigate utility delays and expense.
“In building the assets our growing communities need, both major parties should remember that international investment and skilled migration have shaped our cities for the better for over 80 years.
“We will need to grow skilled migration in coming years to help bridge our skills gaps, sustain our tax base and support our ageing population.”
Article Q&A
What are the Labor Party’s major housing policies?
The Albanese government has announced it will grow its housing support budget to $33 billion. It will raise the income and price caps for its Help to Buy scheme through which potential purchasers receive up to 40 per cent of the price of a home through its shared equity loan scheme. They pay it back only when they sell. For first-home buyers, Labor has also pressured banks to exclude HECS debt from mortgage application calculations.
What are the Liberal Party’s major housing policies?
The centrepiece of the Liberal Coalition’s housing policy is to reduce immigration, scrap Labor’s $10 billion Housing Australia Future Fund (HAFF) and prevent foreigners from buying property in Australia. Mr Dutton would also allow Australians to spend savings in their compulsory workplace pension funds on down payments to buy new homes.
What are The Greens’ major housing policies?
The Greens are running on arguably the biggest policy ideas of the electoral campaign period, with rent freezes, negative gearing and capital gains tax reform in their sights. Greens Treasury spokesperson Nick McKim has said he wants banks to offer a discount mortgage called HomeKeeper to all home owners, including first-home buyers and owner-occupiers.
The Reserve Bank of Australia has been given some ammunition to cut interest rates again on 1 April but will the inflation dip be enough for them to pull the trigger?
Australia’s inflation rate has fallen according to data released within a week of the Reserve Bank of Australia meeting to make its next interest rates decision.After holding steady for two months at 2.5 per cent, the Consumer Price Index (CPI) indicator came in at 2.4 per cent for the 12 months to February 2025.
While heading in the right direction for borrowers looking for a degree of repayment relief, the 0.1 per cent decline might not be enough to prompt the RBA to go back-to-back with rate cuts.
The RBA in February cut the official cash rate to 4.10 per cent but has since indicated that global uncertainty is weighing on its mind as it contemplates further rate cuts in 2025.
The market has priced in a better-than-even chance of a rate cut on 20 May but the upcoming 1 March RBA Monetary Policy Meeting looks too soon for most observers.
RBA Governor Assistant Governor, Sarah Hunter, has said they are “focused on US policy settings, the impact of these on the global economy and how this flows through to activity and inflation here in Australia.”
That will take time to play out as the Donald Trump administration shifts the tariff goalposts on a near daily basis.
The RBA pays more attention to the trimmed mean measure of inflation that also fell 0.1 per cent, to 2.7 per cent.
Michelle Marquardt, ABS Price Statistics Head, said this was down slightly from the 2.8 per cent inflation in January and has remained relatively stable for three months.
“‘The (trimmed mean) CPI excluding volatile items and holiday travel measure rose 2.7 per cent in the 12 months to February, compared to a 2.9 per cent rise in the 12 months to January.”
The largest contributors to the headline CPI rate were food and non-alcoholic beverages (+3.1 per cent), alcohol and tobacco (+6.7 per cent), and housing (+1.8 per cent).
Is a rate cut around the corner?
Shane Oliver, Chief Economist, AMP, said the RBA was likely to wait for the quarterly figure before considering the next interest rate cut.
“It’s doubtful this will be enough to see the RBA ease again at its 1 April meeting, preferring to wait and see the more reliable March quarter CPI data ahead of its May meeting, where we do expect it to ease again,” he said.
The RBA is also well aware that a significant element in inflation’s deceleration is the federal government’s energy rebate.
Sally Tindall, Data Insights Director, Canstar, the government has already confirmed a $150 extension of the electricity rebate.
“While this relief will be distributed to every household across the country, it’s not expected to result in a rise in spending at the shops.
“Certainly, last year’s $300 rebate, combined with the stage three tax cuts, saw many people stash this extra cash straight into the bank.
“In fact, by applying the rebate to people’s power bills, the government has said it expects the extension of the rebate will reduce headline inflation by 0.5 percentage points in the short term.
“The problem is, the RBA knows this reduction in prices is very much temporary, with the government only committing to extend it for another six months.
“The RBA might be peeling back the layers of the monthly inflation data due out on Wednesday but it will continue to take the headline inflation figures with a grain of salt when it meets next week.”
Despite the NAB predicting a hefty drop in the cash rate, the bank’s economic spokesperson Luci Ellis said they were confident rates will be kept on hold in April.
“While we still expect a rate cut in May, back-to-back cuts in February and April were never on the table,” Ms Ellis said.
Renters continue to struggle, even if there are signs the worst is over.
Rents increased by 5.5 per cent in the 12 months to February, down from a 5.8 per cent rise in January, and the lowest annual increase since March 2023, reflecting increased vacancy rates across most capital cities.
The lower inflation figure will, however, give the federal government some succour. The Federal Budget released Tuesday night had cost of living at its heart.
Article Q&A
What is the inflation rate in Australia?
After holding steady for two months at 2.5 per cent, the Consumer Price Index (CPI) indicator came in at 2.4 per cent for the 12 months to February 2025. The RBA pays more attention to the trimmed mean measure of inflation that also fell 0.1 per cent, to 2.7 per cent.
When do energy rebates end?
The government has confirmed a $150 extension of the electricity rebate but has only only committed to extending it for another six months.
Treasurer Jim Chalmers will give every worker a tax cut but for those looking to buy a home and overcome the impact of the housing crisis there were only modest policy adjustments in the 2025-26 Federal Budget.
Treasurer Jim Chalmers’ fourth federal budget, which forms a major plank in the government’s bid for re-election, was focused on the issue seen as the biggest hurdle to that political goal – cost of living.Emphasising the global threats in the form of tariffs, slowing economic growth in China and the US, war in Europe and the domestic impact of Cyclone Alfred, Mr Chalmers had much to say about tax relief, cutting student debt, curtailing inflation and interest rates and increasing the access to medical bulk billing.
On the housing front, there was more on offer money but fewer surprises.
As had been hinted at before the budget was delivered on Tuesday night (25 March), the focus was on spending that the government hopes will put its ambitious commitment to build 1.2 million new homes in five years back on track, via its National Housing Accord.
“Nearly 45,000 new homes were completed in the first quarter of the Accord, with the number of new homes to accelerate as the Government’s initiatives take effect,” Mr Chalmers told Parliament in Canberra.
“The Government is supporting a pipeline of 55,000 social and affordable homes through initiatives like the Housing Australia Future Fund (HAFF) and the Social Housing Accelerator.
“Combined, Round 1 of the HAFF and Accord and Round 2 of the HAFF are expected to deliver approximately 18,000 social and affordable homes.”
The Government has committed $1.5 billion through the Housing Support Program to state, territory and local governments to fund projects to improve planning capability, deliver enabling infrastructure such as roads, water and power, and build more social housing.
The Help to Buy program has been expanded and more taxpayer money put towards it.
An additional $800 million will be invested in the shared equity scheme to expand the program, now set to cost $6.3 billion.
The extra funding will increase the income caps from $90,000 to $100,000 for individuals and from $120,000 to $160,000 for joint applicants and single parents. It will also boost the property price caps to give first-home buyers more choice.
The scheme, which will open for applications later this year, has been designed to help first-home buyers save for a home deposit faster and get onto the property ladder sooner.
With the National Accord already facing an uphill battle to meet its targets, the Government said it is investing $54 million to accelerate the uptake of modern methods of construction.
The Government has also committed $120 million from the National Productivity Fund to incentivise states and territories to remove red tape preventing the uptake of modern methods of construction, which will help more homes be built faster.
Asked by API Magazine if this budget would fix the housing crisis, RSM Australia National Property & Construction Leader, Adam Crowley, replied, “In a nutshell, no.”
He said the government’s policy platform shows an attempt to address the looming shortfall of National Housing Accord targets, but the fact is they remain 426,000 homes behind target.
“The government initiatives lack the immediate, large-scale supply boost needed to address the shortfall.
“With housing demand outpacing construction, the budget’s response is too slow and insufficiently ambitious.
“While the government touts the Help to Buy Scheme, allocating $800 million for lower deposits and mortgage relief, this only assists a limited number of buyers rather than expanding supply.”
Mr Crowley said there was an urgent need to support calls by the Property Council for bolder initiatives, including a refinement of the New Homes Bonus by bringing forward payments and extending its duration to seven years to allow for longer-term reforms, along with a Cabinet-level Housing Sub-Committee that can work across government to pull the levers required to boost housing supply.
“Firm and fast action to address the shortfall would contribute $128 billion in economic activity across the five years of the National Housing Accord, Mandala analysis of Australian Bureau of Statistics data indicates,” he said.
“While the government’s budget announcements to support innovation in construction are welcomed, it remains a small-scale fix rather than a transformative solution.”
Julie Toth, PEXA’s Chief Economist, also said the budget faced an difficult challenge in meeting that 1.2 million homes target.
“The government needs to build 240,000 new homes every year, or 60,000 per quarter and the budget confirms we are a long way from meeting this target, at just 45,000 homes built in the latest quarter of available data.
“Australia has only achieved home building numbers approaching 60,000 per quarter once – for one quarter only in 2015 – during the height of the apartment building boom in inner Melbourne and Sydney.
“While the single cash rate cut from the RBA this year has provided some encouragement, recent building approval trends and extended completion times suggest that supply is still well short of the volume and speed required to reach 60,000 new homes per quarter.
“Adding to these challenges, ex-cyclone Alfred has further reduced national housing stocks, with Treasury estimating its impact could lower GDP growth by 0.25 percentage points in 2025. More money has been made available to assist with cyclone recovery, but regardless of who pays, tradies and materials will need to be diverted to repair and rebuild a long waiting list of damaged homes.
“This budget does not introduce any significant new measures to help achieve this ambitious target.”
A two-year pause on foreign investors purchasing existing homes (effective from 1 April 2025) had already been revealed. It can be expected to have limited impact, as most foreign investment is in new apartments, which are not included in this measure.
The tax cuts cuts for those earning more than $45,000 per year only amount to around $5 per week. When factoring in the existing stage three tax cuts brought in by Labor last year, the changes will deliver the average worker a total tax cut of $2548 a year or about $50 a week.
Tepid reaction to housing policy measures
The broad reaction within the property sector to the Federal Budget’s housing measures was generally lukewarm but short of being overtly critical.
The nation’s peak real estate body, the Real Estate Institute of Australia (REIA), was among the chorus of industry responses best summarised as “not bad but not enough.”
REIA President Ms Leanne Pilkington acknowledged the government’s commitments to housing supply and affordability but stressed that further measures are necessary to tackle ongoing market challenges.
The budget projects a $27.6 billion deficit for 2024-25, with GDP growth expected to reach 1.5 per cent in 2024-25 and 2.25 per cent in 2025-26. Inflation is anticipated to ease to 2.5 per cent by mid-2025, within the Reserve Bank’s target range.
“Although these economic indicators suggest stability, the path to sustained improvements in (housing) affordability requires ongoing government intervention and collaboration with the industry,” Ms Pilkington said.
She said dwelling investment is projected to grow by 1.5 per cent in 2024-25, with stronger growth expected in the years following. The Government’s $33 billion housing investment is seen as a positive step. However, Ms Pilkington said that challenges remain, particularly with labour shortages and regulatory barriers that continue to delay construction.
“Key initiatives supported by REIA include the expansion of the Help to Buy scheme, increased funding for social and affordable housing, and backing for prefabricated and modular home construction.
“Renters will also benefit from the retention of a 45 per cent increase in the maximum Commonwealth Rent Assistance, alongside the introduction of the A Better Deal for Renters policy.”
‘Business as Usual’ won’t cut it, yet this Federal Budget again delivered a same-same response to addressing the issues.’
– Jocelyn Martin, Housing Industry Association
Ms Pilkington called for long-term structural reforms to improve rental supply. She urged the government to streamline planning approvals, reduce red tape, and incentivise private sector investment in build-to-rent projects to ensure the long-term sustainability of housing supply.
The Property Council welcomed the previously announced inclusion in the Federal Budget of $54 million for advanced manufacturing of prefabricated and modular home construction and an expansion of the Help to Buy scheme but said neither side of politics had provided any grand vision.
Bigger population requires big vision
Property Council Chief Executive Mike Zorbas said future Federal Budget deficits and matching state financial shortfalls are the strongest argument yet for more overseas investment and a comprehensive rebase of our tax and regulatory systems.
“As Australia has grown, overseas investment has always helped grow our cities for the better,” Mr Zorbas said.
“Now we have maxed out the national credit card, and with big state deficits, we are going to need other peoples’ money to build the best parts of our cities.
“Industrial hubs, commercial buildings and new housing communities, which Australians need to create opportunities and to support their daily lives, will need increasing institutional investment from overseas.
“We repel overseas investment through overly complex foreign investment review board and ACCC merger frameworks. These compound with daft state taxes on overseas institutions that seek to partner with Australian businesses to create city assets.
“Our next national debate has to start with lifting the productivity handbrake on institutional investment and eventually tackle root and branch tax reform.
“Parliamentarians also have to grapple with the inconvenient truth that we need a higher proportion of skilled migration to support our economy and sustain our tax base.
“That vision is missing from this budget and the pre-election pitches of both sides,” Mr Zorbas said.
Jocelyn Martin, Managing Director, Housing Industry Association, said the budgetary response to the housing crisis was largely underwhelming.
“The Albanese government’s fourth Federal Budget provided a critical juncture to double down and pull out all stops to address the nation’s crippling housing crisis, but, yet again it was a case of focusing on small target solutions,” Ms Martin said.
“It was pleasing to see boosting housing supply as one of the key policy areas for this budget, but the polices announced have missed the mark on addressing the key structural reforms needed.
“Australia needs to be delivering a quarter of million new homes year on year to meet our growing population and put downwards pressure on housing and rental affordability.
“Instead, we are facing a shortfall of new home delivery in excess of 70,000 year on year due to government induced roadblocks, chronic skills shortages and the outrageous level of taxes and regulatory barriers being imposed on home building and new home buyers.
“All levels of government have been warned extensively on these key issues and that ‘Business as Usual’ won’t cut it, yet this Federal Budget again delivered a same, same response to addressing the issues.”
The market is tipping another rate cut soon but the RBA is less convinced in a world of chaotic Trump-led tariffs, although that hasn’t stopped some banks aggressively courting borrowers through lower interest offerings.
There is a widespread expectation that the Reserve Bank of Australia (RBA) is on the verge of launching into a series of interest rate cuts but an assistant governor at the central bank has said all eyes are on policy settings in the United States.Delivering a speech in Sydney, Assistant Governor Sarah Hunter went some way to hosing down assertions that a May cut to the current 4.10 per cent was a given.
Market positioning currently implies a 65 per cent probability the bank will cut again at its 20 May policy meeting after sitting tight at its 1 April board meeting. Borrowers were handed their first interest rate cut in just over four years in February, with the RBA slicing 0.25 per cent off the official cash rate.
Ever watchful of inflation’s trajectory, Ms Hunter said the RBA was focused on US policy settings and how they will impact price movements in Australia and emphasised it will be taking a slow approach towards possible rate cuts.
“Board decisions are always made in an uncertain environment, which means thinking about the distribution of risks around the central forecast,” Ms Hunter said at Tuesday’s Australian Financial Review Banking Summit.
“One of the things we are focused on right now is US policy settings, the impact of these on the global economy and how this flows through to activity and inflation here in Australia; we have been using scenarios, analysis and judgement to assess the policy implications.
“The RBA’s policy decisions are made in the context of various risks and uncertainties,” she said.
Smaller banks offering lowest interest rates
While the RBA is talking down market expectations, some banks are going on the offensive.
The big four banks are trailing well behind the low cost lenders but even a couple of those are trying to be competitive.
Australia’s second biggest home loan lender, Westpac, threw down the gauntlet this week to its big bank competitors with a new lowest variable rate of 5.84 per cent. This is 0.35 percentage points lower than its previous lowest variable rate of 6.19 per cent.
Westpac now holds the equal lowest advertised variable home loan rate of the big four banks, alongside ANZ.
While the lowest big four bank variable rate is currently 5.84 per cent, Canstar shows there are over 35 lenders offering at least one variable rate under 5.75 per cent.
This includes subsidiaries of larger banks including Unloan (CBA) and Timely Home Loans (Bendigo Bank).
The lowest advertised rate available to refinancers is currently 5.64 per cent, available from five different lenders.
Canstar estimates that a complacent owner-occupier is on a variable rate of 6.86 per cent following the RBA’s February cash rate cut and the average owner-occupier is on a rate of 6.06 per cent.
If the complacent borrower refinances to a competitive rate under 5.75 per cent they could potentially save over $12,000 in interest charges over the next two years. This includes $1,000 of switch costs.
The RBA’s juggling act
The RBA’s delicate balancing act in setting rates is based on forecasts that are volatile and offer long lag times.
Ms Hunter told the banking summit that any impact from the February rate cut would take about nine months to fully flow through to GDP, pushing any boost to growth and spending well into late 2025 or beyond. Inflation was even less responsive.
“While it takes about nine months for the cash rate to have its biggest impact on GDP, the peak effect on inflation is estimated to take nearly twice as long.
“This could be because it takes time for an increase in demand to affect the hiring decisions of firms and the job search decisions of households, which then ultimately feed into price setting – or it may simply reflect some ‘stickiness’ in prices.”
Ms Hunter acknowledged that the RBA’s policy decisions are made in the context of various risks and uncertainties.
Chief among those concerns at the moment is the Trump administration’s aggressive US trade policy, which is seemingly impacting consumer sentiment already.
An ANZ Roy Morgan survey released Tuesday (18 March) showed consumer confidence had dropped to its lowest level since October 2024. Less than one in ten Australians expect “good times” for the economy in the next 12 months.
But she stressed that last month’s rate cut was vindicated by signs of a recovery in household spending, particularly in the December quarter. Signs of more discretionary spending, such as dining out, hinted at improving consumer sentiment.
Property prices could reignite
The property market, which has ended a shallow three-month downturn, could also rebound further on the back of any further interest rate cuts.
Faris Dedic, Managing Director, DIG Capital Advisory and COI Capital Management, said the latest interest rate cut marks a turning point, restoring confidence and encouraging buyers to act before prices rise.
“We anticipate demand will outstrip supply across all property asset classes due to minimal new stock coming to market over the past four years.
“While the impact won’t be immediate, property values should see a steady increase, which could accelerate if further cuts follow.
“Rate cuts signal inflation control and economic stimulus, leading to renewed investor confidence.”
The flipside of the rate cuts, of course, is that savings rates are diminished, potentially prompting more investors to look for alternative revenue streams.
“Many investors had been sitting on cash, earning 4 to 5 per cent in deposits but with rates declining, they will now seek higher-yielding assets, particularly in property and private credit.
“For borrowers, access to capital will improve as lending conditions ease, boosting serviceability and creating a more dynamic lending environment.
“The RBA’s shift in stance signals the start of a new cycle and now is the time to act,” Mr Dedic said.
The RBA’s next interest rate announcements are on 1 April and 20 May 2025.
Article Q&A
How long does it take interest rate movements to impact the economy?
The RBA’s Assistant Governor Sarah Hunter said any impact from the February rate cut would take about nine months to fully flow through to GDP, pushing any boost to growth and spending well into late 2025 or beyond. Inflation was even less responsive, taking up to twice as long.
When will the RBA next cut interest rates?
Market positioning currently implies a 65 per cent probability the bank will cut again at its 20 May policy meeting after sitting tight at its 1 April board meeting. But Assistant Governor Sarah Hunter in March 2025 went some way to hosing down assertions that a May cut to the current 4.10 per cent was a given.
What are the lowest loan interest rates?
While the lowest big four bank variable rate is currently 5.84 per cent, Canstar shows there are over 35 lenders offering at least one variable rate under 5.75 per cent. The lowest advertised rate available to refinancers is currently 5.64 per cent, available from five different lenders.
When are the next RBA interest rate announcements?
The RBA’s next interest rate announcements are on 1 April and 20 May 2025.
The average home loan now consumes more than half of the median family’s income, with affordability deteriorating at a startling rate over the past few years.
The voracious appetite of the average home loan now gobbles up more than half of the median family income.
In a devastating critique of the Australian housing landscape, the latest REIA Housing Affordability Report, released Friday (7 March), shows housing affordability has declined to a new all-time low.
Proportion of median family income required to meet average loan repayments
The average loan repayment now amounts to 50.1 per cent of the median family income, an increase of 1.4 percentage points, and the highest proportion since the Real Estate Institute of Australia (REIA) started monitoring housing affordability in 1996.
Given that mortgage stress occurs when repayments exceed more than 30 per cent of household income, mortgage torture or panic might be more apt descriptors for the current norm.
The decline has been spectacular.
In 2002, just over a quarter of a family pay packet was needed to meet average loan repayments. From 2013 to 2021, that figure was fairly stable in the low 30 per cent vicinity.
Proportion of median family income required to meet weighted average median rent
From then on, the chart has gone through the roof and without respite anywhere in the country. Housing affordability declined in all states and territories.
Renters have fared a little better of late.
The proportion of income required to meet median rents decreased slightly in the December quarter of 2024 to 24.7 per cent, a drop of 0.2 percentage points over the quarter. It does, however, remain 0.7 percentage points higher than the same period last year and has also deteriorated badly since 2020.
Leanne Pilkington, President, Real Estate Institute of Australia, said the decline in affordability can be attributed to larger mortgages required to purchase as dwelling prices increased.
“Offsetting this, in part, was an increase in the national median weekly family income of 0.9 per cent over the December quarter and 3.7 per cent over the past 12 months to $2,528.
“Interest rates remained largely unchanged over the December quarter ‑ the quarterly average standard variable interest rate remained stable at 8.8 per cent, and the quarterly average three‑year fixed rate decreased only 0.2 percentage points to 6.1 per cent.”
The manageability of mortgages declined across the board, ranging from 0.6 percentage points in Victoria, to 2.5 percentage points in Western Australia.
(Source: REIA)
First home buyers undeterred
Despite the drop in affordability, the number of first home buyers increased during the December quarter.
New loan commitments to first home buyers increased by 5.5 per cent compared to the previous quarter to 31,036, according to REIA. This was still1.3 per cent fewer than in the December quarter 2023.
The number of first home buyers increased in Victoria, Queensland, South Australia and the Northern Territory, but decreased in New South Wales, Western Australia, Tasmania and the Australian Capital Territory.
(Source: REIA)
Domain’s latest First Home Buyer Report has revealed that more Australian cities are facing mortgage stress than five years ago and highlights the challenges faced by a typical 24-35 year old couple on average wages, including entry-level house and unit prices and savings time.
In the combined capitals, affordability remains a struggle. Entry priced houses take up 47.1 per cent share of household income, while units require 30.7 per cent.
Darwin is the only city free of mortgage stress for entry-priced houses, with repayments taking up 27.7 per cent of household income. Perth is the next best city at 37.3 per cent, already above the 30 per cent threshold.
Sydney, Canberra, Melbourne, Brisbane, Adelaide and Hobart all exceed the benchmark for entry-priced houses. Sydney and Canberra are the most affected, with repayments for entry-priced houses consuming 57.6 per cent and 46.7 per cent of income, respectively. Brisbane and Adelaide also closely follow, with 46.4 per cent and 45.9 per cent.
Mortgage repayments on an entry-priced home as a percentage of income for a couple aged 25-34
(Source: Domain)
Domain’s Chief of Research and Economics, Dr Nicola Powell, said mortgage stress varies, with some cities, particularly for entry-level units, seeing improvements.
“The broader property market slowdown, easing prices and cash rate cuts points to gradual relief, however, lower cash rates can also boost borrowing power, potentially pushing prices up, especially with more rate cuts on the horizon.
Ms Powell said the proportion of income needed for an entry-priced house across the combined capitals is 19 percentage points higher than five years ago, with units rising by about 8 percentage points.
“The aggressive rate hikes in 2022 and 2023 took a huge toll on mortgage serviceability, while soaring property prices over the past five years have pushed household debt to new highs.”
Affordability risks abound
Ms Pilkington said affordability usually improves with each rate cut; for every 0.25 per cent cut in interest rates, the proportion of family income required to service the average loan usually drops by around 1 percentage point.
“To end the year on a positive note there are signs that both housing and rental affordability will improve in 2025.
“The RBA cut rates by 0.25 per cent at its February meeting with further cuts expected during the year.
Matt Bell, Chief Economist, Oliver Hume, said the increase in the established market in February has flowed through to the land market, with enquiry up strongly across key markets.
“We are expecting increased sales volumes and rising prices across all land markets in 2025, particularly in the second half, as rate cuts work their way through household finances and balance sheets,” Mr Bell said.
“While February’s rate cut didn’t move the needle much on affordability directly, it is the expectation of further rate cuts that will be driving most of the increase in activity.”
The market now expects two or three cuts throughout the remainder of the calendar year, with the next coming at the May or July meeting.
“Our expectation remains for the high dwelling price growth experienced in Perth, Adelaide and Brisbane to ease, Sydney to remain about the same, and Melbourne to continue to move from falling prices to price growth.”
Article Q&A
Is property affordable in Australia?
Housing affordability has declined to a new all-time low in Australia. The average loan repayment now amounts to 50.1 per cent of the median family income, an increase of 1.4 percentage points, and the highest proportion since the REIA started monitoring housing affordability in 1996.
How affordable is rent in Australia?
The proportion of income required to meet median rents decreased slightly in the December quarter of 2024, to 24.7 per cent, a drop of 0.2 percentage points over the quarter. It does, however, remain 0.7 percentage points higher than the same period last year and has also deteriorated badly since 2020.
Are first home buyers active in the Australian property market?
New loan commitments to first home buyers increased by 5.5 per cent compared to the previous quarter in December 2024 to 31,036, according to REIA. This was still1.3 per cent fewer than in the December quarter 2023.
Home loans stretched over four decades could soon be normalised if the banks respond to a startling finding about just how willing Australian borrowers are to endure such a lengthy period of debt.
Do you fancy paying off a home loan until 2065?
By this point, we could all be commuting in flying cars – or possibly living a different, more dystopian future.
But however the next 40 years pan out, a surprisingly high proportion of Australians would take out a four decade home loan if it made the monthly repayments less onerous.
Despite the fact that such a lengthy loan extension would likely add hundreds of thousands of dollars to the final amount paid, a Finder survey of 1,013 respondents revealed 30 per cent of Australians – equivalent to 6.2 million people – would do just that.
Only four lenders currently offer 40-year mortgages in Australia – three of those exclusively to first home buyers.
More banks may soon be looking to hook borrowers in for longer though.
Housing affordability deteriorated to a three-decade low despite the Reserve Bank’s repeated interest rate hikes over 2022 and 2023.
Anyone entering into such a long-term financial arrangement should be aware of the pros and cons.
(Source: Money)
Finder analysis shows that while the monthly repayment for the average Australian loan of $641,416 would drop by more than $300 on a 40-year loan compared to an identical 30-year loan, the full repayment would cost the borrower $316,000 extra.
Carolyn Xaftellis and Grace Neo, Senior Mortgage Specialists at Specialist Mortgage, told API Magazine that the loans can be managed and could even pay dividends if the right property was purchased.
“Opting for a loan term longer than 25 to 30 years results in a higher amount of interest paid over the term, however, this can be mitigated by making additional repayments during the loan term when possible, such as paying a bonus into the loan or increasing regular repayments when expenses like school fees cease,” Ms Xaftellis said.
“Additionally, opting for fortnightly or weekly repayments instead of monthly ones can accelerate debt repayment.
“Longer loan terms often come with higher interest rates due to increased risk but the potential growth in property value can offset this disadvantage.”
Ms Neo added that lending landscape had shifted dramatically since the years when borrowers would sit unthinkingly with one bank for the lifetime of their mortgage.
“No one has the same 25- or 30-year loan anymore.
“The average life of a loan nowadays is about four to five years and with the current competitiveness in the market, astute borrowers would be looking at refinancing or restructuring loans within that timeframe.
“So technically, nobody would necessarily be tied down to a 40 year loan term if their circumstances changed.”
The average home loan size in Australia reached a record high of $641,416, according to data from the Australian Bureau of Statistics. That’s up by 37 per cent from September 2019 when the average home loan size in Australia was $467,403.
In response, Finder research published last year showed 13 per cent of homeowners had extended the length of their loan in the year prior to lower their repayments. Nearly half extended their loans by more than five years.
There is fertile ground to sell the idea of 40-year home loans.
As of December, 27.9 per cent of mortgage holders or 1,595,000 people were at risk of mortgage stress. This is 788,000 more people than when the RBA began increasing the cash rate in May 2022.
Meanwhile, the number of Aussies considered extremely at risk of mortgage stress now totals 973,000 people or 17.4 per cent of mortgage holders. This is far above the decade’s long-term average of 14.6 per cent.
API Magazine’s most recent quarterly Property Sentiment Report found that 24 per cent of respondents were under mortgage or rental stress and, of those, 69 per cent had slipped into that predicament within the past 12 months.
Added to that, first home buyers are retreating from the market just as investor loans ramp up.
Mortgage growth to first home buyers slowed at the end of 2024, with 1.3 per cent fewer loans settled in the December 2024 quarter compared to the same period in 2023.
Contrast that with the rampaging investor loan market, and you can see why the lower repayments of a 40-year loan are appealling to many, despite the hefty long-term debt implications.
Investor loans grew 22 per cent annually, compared to 6 per cent for owner-occupier loans. This means the investment property market is growing more than three times faster than the rest of the homebuyer market.
(Source: Money)
Money.com.au’s Property Expert, Mansour Soltani, said rising house prices have increased equity for existing homeowners to invest in additional properties.
“With vacancy rates across capital cities at record lows, rental demand showing no signs of easing and population growth, we’re likely to see the investor market pull even further ahead in 2025 as market conditions shift in a downwards rate cycle,” he said.
In the December 2024 quarter, 161,276 loans were refinanced — the highest level since September 2023 and 12,931 more than in December 2023, marking a 9 per cent increase.
“This was the only quarter in 2024 to see growth in refinancing, suggesting a renewed interest that is likely to pick up in 2025,” Mr Soltani added.
Article Q&A
How many banks offer a 40-year home loan?
Only four lenders currently offer 40-year mortgages in Australia – three of those exclusively to first home buyers.
Should I take out a 40-year mortgage?
Anyone entering into such a long-term financial arrangement should be aware of the pros and cons. Finder analysis shows that while the monthly repayment for the average Australian loan of $641,416 would drop by over $300 on a 40-year loan compared to an identical 30-year loan, the full repayment would cost the borrower $316,000 more.
Which borrowers are most active in the property market now?
Investor loans grew 22 per cent annually, compared to 6 per cent for owner-occupier loans. This means the investment property market is growing more than three times faster than the rest of the homebuyer market.
Strong population growth and a trickle rather than sea of city workers returning to the office points to a strong year ahead for regional property markets within New South Wales.
The trend we have dubbed the ‘Exodus to Affordable Lifestyle’ is one of the key reasons I expect regional New South Wales to be one of the strong residential property markets in 2025.
The trend is not new, with big cities like Sydney losing population to internal migration for the past 10 years.
Despite that long history, the trend remains as strong now as it’s ever been and is showing no signs of slowing down.
Big businesses may be demanding that workers return to the office rather than work remotely and in some circumstances that will happen, but on the whole, working remotely is here to stay.
The latest office vacancy data shows the ‘return to the office’ movement is not happening in a major way.
A Property Council of Australia report on office vacancies shows that more offices were empty in January 2025 than six months ago.
In Sydney, home to many finance, insurance and tech workers, the vacancy rate jumped from 11.6 to 12.8 per cent. The number of empty floors in Melbourne remained unchanged, at a historic high of 18 per cent and vacancy rates sat between 9 and 18 per cent in seven of the eight state and territory capital cities.
The movement of people from the biggest cities to regional areas is all about affordability and lifestyle, enabled by technology that allows more people to work remotely. That’s why office vacancies are so high.
Sydney, with a median house price of around $1.2 million, has been steadily losing population and a proportion of that has been relocating to regional NSW, where the median house price is about $750,000 although plenty of regional cities and towns have houses on offer for less than $500,000.
This is a key reason why regional NSW outperformed Sydney on price growth. In the past 12 months, Sydney’s median prices have risen 1.9 per cent for houses and 1.1 per cent for units, while regional NSW has managed 3 per cent for houses and units alike.
Some individual regional markets are doing considerably better. Many suburbs in Wollongong have increased by between 7 and 9 per cent, and a number of Newcastle suburbs have recorded double-digit growth in median house prices, as have some of the Albury locations and several of the suburbs of Tamworth.
Analysis by Hotspotting ranking the eight capital cities and six state regional markets (14 major jurisdictions) from 1 to 14 based on a series of different metrics ranked regional NSW strongly for its growth prospects in 2025.
As such, expect 2025 to be a solid year overall in regional NSW markets, buoyed by affordable prices and solid yields.
Article Q&A
Is regional NSW outperforming Sydney property?
Sydney, with a median house price of around $1.2 million, has been steadily losing population and a proportion of that has been relocating to regional NSW, where the median house price is about $750,000 although plenty of regional cities and towns have houses on offer for less than $500,000. This is a key reason why regional NSW outperformed Sydney on price growth.
Is regional New South Wales a good place to buy property in 2025?
Analysis by Hotspotting ranking the eight capital cities and six state regional markets (14 major jurisdictions) from 1 to 14 based on a series of different metrics ranked regional NSW strongly for its growth prospects in 2025. As such, expect 2025 to be a solid year overall in regional NSW markets, buoyed by affordable prices and solid yields.
Are city workers returning to the office?
A Property Council of Australia report on office vacancies shows that more offices were empty in January 2025 than six months ago. In Sydney, home to many finance, insurance and tech workers, the vacancy rate jumped from 11.6 to 12.8 per cent. The number of empty floors in Melbourne remained unchanged, at a historic high of 18 per cent and vacancy rates sat between 9 and 18 per cent in seven of the eight state and territory capital cities.
