Worried about property prices falling?

This chart from Cotality is a good reminder that downturns are a normal part of the housing cycle.

Over the past 40 years, Australia’s combined capital city market has experienced 10 separate downturns. The largest declines were 8.2% during the 2017 to 2019 credit tightening period and 8.1% during the 2022 to 2023 rate hiking cycle.

But while those falls grabbed headlines at the time, neither lasted forever.

In fact, today’s median property prices are significantly higher than they were before any of those downturns began.

That highlights one of the key lessons from Australian property history: time in the market matters more than timing.

Short-term movements can be unpredictable, especially when interest rates or economic conditions change quickly. But over longer periods, housing has generally rewarded patience.

That is why many investors take a long-term approach. Rather than reacting to every downturn, they focus on holding quality property through the cycle and allowing time, population growth and supply shortages to do the heavy lifting.

Family support now key to homeownership

Getting into the property market is increasingly becoming a family effort.

According to Compare the Market, 34% of Australians rely on financial support from parents or grandparents when buying a home.

For many, it is not optional. Almost half of respondents said they could not purchase without that help, rising to 61% among current homeowners.

At the same time, there is growing strain on families. Nearly one in three said they will need support but are unsure if their parents can afford it.

Most assistance comes as deposit gifts, followed by guarantor arrangements that help buyers avoid larger upfront costs.

General Manager of Money at Compare the Market, Stephen Zeller said the data shows how affordability challenges are reshaping the path to ownership, with family wealth playing a bigger role than ever. 

“This is why it’s crucial for any prospective buyer to talk to a broker and compare their home loan options. Saving on interest rates or finding a loan-to-value ratio that works for your budget can help reduce costs and reliance on the bank of mum and dad.”

Housing supply lifted before global shock

Australia’s housing supply outlook has taken a hit from global events.

Before the conflict in the Middle East, the National Housing Supply and Affordability Council (NHSAC) expected around 980,000 homes to be delivered by mid 2029 (see image). 

That was 42,000 more than forecast in 2025, driven by stronger approvals and commencements in early 2026.

Construction timelines were also improving, helping projects move faster.

But rising fuel prices and supply chain disruptions are now pushing up construction costs, which could reduce the number of projects that go ahead.

So what needs to happen next? 

NHSAC’s view is that the response needs to focus on keeping supply moving.

That includes improving construction productivity, investing more in social and affordable housing, and continuing planning reforms to bring projects to market faster.

It also highlights the need for coordinated policy and better infrastructure to support new development.

Global events are making the inflation fight more complicated.

Minutes from the Reserve Bank of Australia’s (RBA) March meeting suggest headline inflation could reach around 5% by June if oil remains near US$100 a barrel.

That risk played a key role in the decision to lift the cash rate to 4.1%.

However, the vote was close, with several board members favouring a hold as uncertainty around the global outlook continues to build.

While the RBA cannot directly influence oil prices, it can shape how those costs flow through the economy. Its aim is to limit the flow-on effects, so temporary price spikes do not feed into wages, spending and expectations, which is how inflation becomes more persistent.

Property profits hit new highs

Another quarter, another strong result for property owners.

Cotality’s Pain and Gain report shows 95.9% of resales delivered a profit in the December 2025 quarter, the highest level in more than two decades.

The median gain reached $365,000, as rising home values continued to lift seller outcomes.

Houses are clearly outperforming units, with 98.1% of house resales profitable compared to 91.2% for units. Losses remain more concentrated in certain unit markets.

Regionally, results were even stronger, with 97.6% of resales turning a profit.

These outcomes reflect a mix of rising prices, lower interest rates through 2025 and resilient demand.

Looking ahead, Cotality said some markets may soften as listings rise and price growth eases, particularly in Sydney and Melbourne. But the broader picture remains strong. Over the long term, property has consistently built wealth for most owners, supported by population growth, limited supply and steady demand.

A welcome lift in housing approvals

After a sluggish start to the year, building approvals have picked up.

New data from the Australian Bureau of Statistics shows approvals rose 29.7% in February to 19,022 dwellings, the biggest monthly increase since early 2022.

The rebound was driven by apartments, with approvals for units and townhouses rising 101.2% to 8,922. Detached houses barely shifted, increasing just 0.2%.

That mix reflects the growing role of higher-density housing in addressing supply shortages.

Even so, approvals are still running below the level needed to meet Australia’s housing targets. With interest rates rising and construction challenges ongoing, turning approvals into completed homes remains the bigger hurdle.

The first rung of the property ladder is getting higher, even for buyers targeting the lower end of the market.

Domain’s First Home Buyer Report for 2026 shows repayments on an entry-level house now absorb 48.9% of a young couple’s income across the capitals. That figure has climbed 24% in just five years. Units are less demanding, but still take 30.9% of income.

Saving the deposit is also taking longer. Nationally, it now takes five years to accumulate a 20% deposit for an entry-level house and three years and six months for a unit.

The shift becomes clearer when you compare property prices with wages. Over five years, wages rose 21%. Entry-level houses jumped 68% and units 30%. 

At the same time, demand has continued to run ahead of supply. Limited new housing and tight listings have kept competition firm, particularly at the more affordable end.

Deposit support programs can help some buyers enter the market sooner. However, they do not reduce the share of income required to service a mortgage. And by bringing more buyers into the entry-level segment, they can also lift competition.

This doesn’t mean that homeownership is out of reach, but it does mean careful planning, realistic expectations and the right lending structure matter more than ever.

Brokers now write 76.7% of new home loans

More than three in four Australians are choosing a mortgage broker when taking out a home loan.

Brokers facilitated 76.7% of all new residential home loans in the December 2025 quarter, according to the Mortgage & Finance Association of Australia. That is the highest December quarter result since reporting began in 2013.

In dollar terms, brokers settled $142.20 billion in new loans during the quarter, up 9.2% on the previous quarter and 23.6% higher than a year earlier.

So why are brokers so popular?

Today’s lending market is complex. There are dozens of lenders, hundreds of products and constantly changing policies. A broker compares options across the market and helps borrowers find a loan that genuinely fits their circumstances, not just the headline rate.

That combination of choice, expertise and support is clearly resonating.

Refinancing surges 20% over the past year

More than 640,000 Australians refinanced their mortgage in 2025, according to the latest lending indicators from the Australian Bureau of Statistics.

That’s a 20% increase on the previous year.

As the graph below shows, after a dip in June 2024, refinancing activity has been steadily climbing in both value and number.

Interestingly, internal refinancing led the charge. The value of loans restructured with the same lender jumped 37% over the 2025 calendar year, while the number of those loans rose 26.8%.

That tells an important story. Borrowers are increasingly aware that loyalty does not automatically deliver a competitive rate. As a result, many are renegotiating with their existing lender, while others are moving entirely.

Strong refinancing growth reflects intense competition among lenders. However, making that competition work in your favour is not always straightforward.

This is where a broker can make the process easier. They can assess your borrowing position, compare options across the market and manage the transition if refinancing is worthwhile, helping ensure your loan remains competitive and suited to your circumstances.

The Reserve Bank of Australia is lifting rates to fight inflation, but the biggest source of price pressure is one it cannot easily control, according to Ray White Group chief economist Nerida Conisbee.

Ms Conisbee explains that housing costs are growing about 5.5% annually, outpacing headline inflation. The pressure is coming from strong rental growth and persistently high building costs, both linked to a shortage of housing.

That matters as interest rate rises are a blunt tool in this context. They do not speed up approvals or expand the construction workforce. Instead, they raise financing costs and make new projects harder to deliver, reducing future housing supply.

The rental sector shows how this plays out. As rates rose from 2022, investor lending dropped sharply. Fewer rental properties were added at the same time population growth accelerated. By mid 2024, rents were more than 18% higher nationally, with some cities seeing rises close to 30%.

Ms Conisbee argues this creates a policy mismatch. Rate rises may slow house price growth, but without targeted supply reform, housing-driven inflation is likely to remain stubborn and continue feeding into the broader cost-of-living problem.

Home building approvals fall sharply in December

Australia’s housing pipeline took another hit in December, with total dwelling approvals falling 14.9% from November to 15,542, according to the Australian Bureau of Statistics

The fall was driven by a 29.8% decline in approvals for apartments, townhouses and other non-house dwellings. That came after a big spike in November, highlighting just how volatile the data can be. Detached house approvals rose slightly, up 0.4% for the month.

While monthly swings are common, the bigger concern is the broader trend. Approvals have remained below average for over a year, which points to a weakening pipeline of new housing supply. With population growth still strong, fewer approvals now mean fewer homes built in the future – adding pressure to prices and rents.

Boomers shift out of property as Gen X take charge

The great wealth transfer is well underway, with Baby Boomers reducing their exposure to property while Gen X build their asset base.

New research from KPMG shows Gen X now hold the most wealth in property and shares of any generation, with an average of $1.445 million in dwellings and land. That compares to $1.360 million for Boomers, who are increasingly moving wealth into more liquid assets such as cash and super.

In net terms, Boomers are still ahead, with a $2.46 million average household net worth. Gen X aren’t far behind at almost $2.2 million. But Millennials face a much steeper climb, with an average net worth of just $905,000. Their average property holding is $890,000 – and in many cases, debt outweighs equity – highlighting the impact of larger mortgages and fewer years in the market.

Encouragingly, younger Australians have seen the biggest wealth growth over the past five years. However, that’s largely due to first home purchases during the low-rate window of 2020–21. And with rates higher and deposits now harder to save, the next wave of buyers will likely find the climb more difficult.

 

Three capital cities dominated the property market in 2025.

Darwin (18.9%), Perth (15.9%) and Brisbane (14.5%) recorded extraordinary price growth during the year – well above the national median of 8.6%, according to Cotality.

Darwin’s surge is a relatively new one – the city’s median price barely moved in 2024 and has increased 38.3% over the past five years.

By contrast, Perth and Brisbane have been running hot for much of that period, with prices up 89.0% and 86.7% respectively.

Most commentators expect home values to continue rising in 2026, although the pace of growth is likely to depend heavily on interest rate movements and borrowing conditions.

Property sellers post record profits

How much has owning a home really paid off for Australians? New Cotality data provides a clear answer.

In the September 2025 quarter, Australians who sold their home for more than the original purchase price recorded a median gain of $335,000 – the highest profit on record. By contrast, those who sold at a loss recorded a median loss of $44,000.

One of the clearest patterns in the data is the link between time in the market and outcomes. Sellers who held their property for less than two years made a median profit of $132,000. That figure rose to $361,500 for those who held for up to 10 years, $496,750 for up to 20 years and $843,000 for sellers who held their property for more than 30 years.

Overall, 95.5% of vendors sold for a profit, while 4.5% made a loss.

While individual results always vary by location and timing, the data highlights that property tends to reward patience, long-term thinking and sensible financing structures.

Population set to climb past 31 million

The federal government expects Australia’s population to reach 31.5 million by 2035–36, up from 27.5 million today, according to the 2025 Population Statement.

That’s despite a projected slowdown in annual growth to 1.3% in 2025–26, as net overseas migration normalises.

Even at that rate, more than 330,000 people will be added each year – a figure well above current levels of home building.

This gap continues to place upward pressure on rents and prices, particularly in cities with strong population inflows like Perth, Brisbane and Melbourne.

Unless construction activity lifts significantly, the gap between housing supply and demand will keep widening – making affordability an even bigger challenge over the decade ahead.

SQM Research is forecasting a strong year ahead for the housing market, with interest rate cuts from mid-2026 expected to trigger a new wave of buyer demand. That’s likely to push prices sharply higher in cities where supply remains tight and economic conditions are solid.

In its Boom and Bust Report 2026, SQM tips national home values to rise 6–10%, with several capitals expected to outperform.

Perth is forecast to lead the market, with prices rising 12–16%, followed by Darwin (12–16%), Brisbane (10–15%) and Adelaide (10–14%). Based on current medians, that would push Perth’s median above $1 million and Brisbane’s close to $1.1 million

Even in softer markets like Melbourne, Hobart and Canberra, values are expected to increase between 3% and 7%.

SQM’s base case assumes moderate population growth, a small surplus of completions and one or two interest rate cuts in the second half of the year. But even if cuts are delayed, prices are still forecast to rise across all capitals – with the biggest gains in Brisbane, Perth and Adelaide.

High DTI loans to be capped from February

APRA, the banking regulator, will limit the share of high debt-to-income (DTI) lending from 1 February to keep financial risks in check. Banks will be allowed to write no more than 20% of new loans at a DTI of six or above.

The move reflects concern about rising household debt as the market heats up. Interest rate cuts this year have lifted borrowing capacity and credit growth is running above its long-term average. At the same time, investor lending has surged, with new investor loans growing at about triple the pace of owner-occupier loans.

APRA said high DTI lending is still relatively low overall, but has begun to rise and is increasingly concentrated among investors (see image). In past cycles, this type of borrowing has been linked to easing credit standards and rapid price gains.

The cap will not apply to bridging loans or loans for new builds, to avoid slowing housing supply.

By acting early, APRA hopes to stop household debt from climbing to levels that could weaken financial stability later in the cycle.

Just 12% of homes are affordable for first home buyers

Housing has become significantly less affordable for first home buyers, according to new analysis from KPMG.

Back in 2019–20, buyers earning $150,000 could afford about 30% of the market. Today, a household earning $180,000 can only afford 12%.

That decline has been driven by soaring property prices. Since 2020, the median has jumped 80% in Queensland and South Australia, 75% in Western Australia, 40% in New South Wales and 20% in Victoria.

In South Australia, a quarter of homes are still within reach, but that’s down from 75% just five years ago. In NSW, affordability has flatlined at 5%.

The share of affordable new homes is also shrinking. Only 12% of new housing supply in 2024–25 was priced under $800,000, compared to around 33% in 2022–23.

As affordability falls, many first home buyers are targeting regional areas, smaller apartments or new fringe developments. But competition is tight, and the pool of entry-level stock continues to shrink.

Australia’s homebuilding approvals jumped 12% in September from August, offering a glimmer of hope that supply might be starting to catch up with demand.

The latest figures from the Australian Bureau of Statistics show apartment approvals were the main driver, up 26.0% for the month. Detached house approvals also edged up 4.4%.

Over the 12 months to September, 191,695 new homes were approved – the highest annual figure in almost three years.

That’s a positive sign, but we’re not out of the woods yet. According to the National Housing Accord, we need to be building more than 240,000 homes per year to meet our population needs. Right now, we’re around 48,000 a year below that target.

So while it’s encouraging to see approvals trending up, supply is still falling short. That shortfall will likely continue to drive up competition for both rentals and homes to buy.

Rentvesting offers a foot in the door for first-time buyers

For some first home buyers, the dream of owning a home in their preferred suburb still feels out of reach. That’s where rentvesting comes in.

According to the PropTrack–Terri Scheer Investor Report 2025, around 4–5% of investor purchases are made by first-time buyers choosing to rent out their first property rather than live in it. Instead of buying in an unaffordable area, they purchase in a more affordable growth suburb and continue renting where they want to live.

The strategy is most popular in New South Wales, where housing affordability is particularly stretched. It’s less common in Victoria, but still used by buyers looking for a flexible path into the market.

Rentvesting isn’t for everyone, but it can offer a smart way to build equity while preserving lifestyle. With investor activity rising and rents holding firm, more first-time buyers may start exploring this alternative path to ownership.

House hunting? Look one stop further

A short train ride could lead to big savings.

PropTrack has found that in many capital cities, buyers can save hundreds of thousands of dollars – even more than $1 million – just by looking one train stop further from the CBD.

The biggest gap was found in Melbourne, where Malvern’s median house price is $2.99 million and Caulfield’s is $1.87 million, a difference of $1.12 million. In Sydney, Como and Oatley are divided by the Georges River and three minutes of train time, but $747,500 in price. Perth’s Cottesloe and Mosman Park show a $662,500 difference. Even in Brisbane, buyers can save over $500,000 by looking just one suburb over.

According to REA economist Eleanor Creagh, land values generally fall the further you move from major employment and lifestyle hubs, though school zones and local amenities can flip the trend.

For budget-conscious buyers, this research is a reminder that smart trade-offs such as a slightly longer commute can unlock big value.

The First Home Guarantee has been expanded as of 1 October. It now includes unlimited places, no income restrictions and higher property price caps. That means more first home buyers can enter the market with a 5% deposit and avoid lender’s mortgage insurance.

New research from Cotality explores whether it makes financial sense to buy sooner with a smaller deposit, or wait longer to save the full 20%.

The catch with a 5% deposit is that you borrow more – and pay more interest over time. But that cost may be outweighed by the savings from escaping the rental market earlier.

Since 2020, national rents have increased by $200 per week, or more than $10,000 per year.

That adds up. In Sydney, for example, using the scheme could mean buying 12 years earlier and saving $502,000 in rent.

The scheme won’t suit everyone, but for renters in expensive markets, it could open the door to ownership sooner, with big long-term savings.

Broker market share climbs to record 77.6%

The mortgage broker channel continues to dominate the Australian home loan market.

Brokers facilitated 77.6% of all new residential loans in the June 2025 quarter – the highest share on record, according to data from Cotality for the Mortgage & Finance Association of Australia (MFAA).

Market share has now risen by more than 10 percentage points in just two years. In June 2023, broker share sat at 67.2%.

The value of new loans facilitated by brokers also rose to $121.58 billion, a 21.46% jump from a year earlier and a 31.3% lift on June 2023.

MFAA CEO Anja Pannek said the figures show Australians continue to choose brokers for guidance and support. “This result continues to reflect Australians’ clear choice to work with their mortgage broker as they navigate their home financing journey.”

Sellers bank record profits despite small rise in losses

It was another strong quarter for property sellers, with the latest Pain & Gain report from Cotality revealing $36.6 billion in resale profits during the three months to June.

Nationally, 94.8% of resales made a nominal gain, down slightly from 95% in the March quarter but still well above the 10-year average of 91.5%. The median profit hit a record high of $315,000.

Loss-making sales rose modestly to 5.2% of resales, with nearly 60% of those losses concentrated in Sydney and Melbourne units. Darwin also recorded a high share of loss-making sales at 20.6%.

By contrast, Brisbane was the best-performing capital city, with 99.7% of resales turning a profit and median gains reaching $400,000. Regional sellers also outperformed the capitals, with 96.4% of sales in the black.

The numbers highlight the continued strength of the market – particularly for long-term owners – even as patchier results emerge in some segments.

Westpac has updated its property forecast ahead of the spring selling season, and it’s good news for Melbourne homeowners.

Nationally, Westpac expects 6% growth this year and 9% next year. That’s double what it predicted back in May. Melbourne is tipped to lead the charge with 10% growth in 2026, the highest of all capitals.

The bank says interest rate cuts have lifted sentiment, while the number of homes for sale has dropped to just 2.5 months’ worth of supply, well below the usual 3.5 months.

Another key driver is the rise in cash buyers. More retirees are using super to purchase property outright, while growing intergenerational support from the “Bank of Mum and Dad” is helping younger buyers into the market.

Although building approvals are starting to rise – particularly in higher-density housing – Westpac says a meaningful increase in completed homes won’t arrive until late 2026.

In the meantime, demand is likely to keep outpacing supply, giving sellers the advantage.

Buying still cheaper than building, but gap is narrowing

Construction cost inflation is finally slowing – and in some cities, house price growth has caught up. This, in turn, is shifting the buy-vs-build equation.

According to Ray White chief economist Nerida Conisbee, construction costs and house prices are now tracking much closer together. Between 2021 and mid-2025, national construction costs rose 35%, while capital city house prices climbed 32%. That 2.3-point gap is down sharply from 16 points in December 2023.

In Perth and Adelaide, house price growth has actually surpassed construction costs, encouraging new development and strengthening the housing pipeline.

But in Melbourne, the story remains difficult. House prices have risen just 4% over four years, compared to a 25% jump in construction costs. That makes building far less viable, a challenge that’s also playing out in Sydney and Canberra

Stamp duty costs outpace incomes

Today’s buyers face stamp duty costs that are up to three times heavier relative to income than those of 25 years ago, according to Domain.

Domain’s research found that, in Sydney, the stamp duty on a median-priced house was equal to 44.5% of income in 2000. By 2024, it had risen to 119.7%. Melbourne’s share grew from 36.5% to 109.3%, while Brisbane lifted from 19.5% to 66.3%.

Overall, stamp duty has grown 2.7 times faster than wages in Sydney, three times faster in Melbourne and 3.4 times faster in Brisbane. 

Domain said that much of the increase is linked to soaring property prices. However, stamp duty thresholds have barely shifted during the same period. This, in turn, has created “bracket creep”, where buyers of even modest homes were paying at rates originally designed for more expensive properties. That structural shift has magnified the burden across the market.

While the burden has grown sharply, there are some relief measures in place. For instance, stamp duty concessions and exemptions are available for eligible first home buyers, although these differ from state to state.

National house prices are set to climb faster than expected this year, with KPMG upgrading its 2025 forecast to 4.9% growth, up from 3.3%, after interest rate cuts boosted buyer sentiment and activity.

Adelaide and Darwin are tipped to lead the pack, each with 7% house price growth, followed by Perth, Sydney and Melbourne (5%). Brisbane is forecast at 4%, Hobart at 2% and Canberra at just 1%.

Unit prices are expected to rise faster in many markets, with Brisbane units set for a standout 7% gain, and Darwin units topping the list at 8%, as affordability pressures push more buyers towards smaller dwellings.

In 2026, national growth is expected to ease to 4.5% as supply improves, population growth stabilises and affordability constraints weigh on demand. 

However, completions are expected to average just 160,000 new dwellings annually over the next two years – 30% below the level needed to meet national housing targets – meaning supply constraints will continue to underpin prices.

Smaller cities deliver bigger gains over two decades

Adelaide and Hobart have outpaced Sydney and Melbourne for house price growth over the past 20 years, according to a new valuation report from the Australian Property Institute.

Between 2005 and 2024, Adelaide’s median house prices soared 175.1%, just ahead of Hobart at 171.9%. Sydney (170.9%), Brisbane (169.4%) and Melbourne (169.2%) followed close behind, but the results challenge long-held assumptions about where the best investment returns lie.

For units, Hobart again led the way with 133.5% growth, followed by Adelaide (128.9%) and Melbourne (109.1%). Sydney and Brisbane underperformed the national average. 

The report said that the smaller capital cities are increasingly outperforming their bigger cousins, despite drawing fewer migrants. While Sydney and Melbourne attracted the bulk of new arrivals, their housing markets delivered slightly lower returns.

These results suggest other forces, like affordability, supply constraints and lifestyle shifts, may have a bigger influence on long-term capital growth than migration alone.

Approvals hit 22-month high in June

June’s building approvals data delivered good news for housing supply with numbers up 11.9% to 17,076 dwellings, the strongest monthly result in nearly two years, according to the Australian Bureau of Statistics.

The spike was largely due to a 33.1% increase in multi-unit approvals, while house approvals dipped slightly (-2.0%) for the month. 

Over the full 2024/25 financial year, 187,330 dwellings were approved, 13.9% more than the previous year. Multi-unit approvals rose 27.9% over the year, while detached house approvals grew 6.1%.

While the turnaround is welcome, the Housing Industry Association (HIA) cautioned that these figures still fall short of the 240,000 approvals per year needed to meet the federal government’s housing targets.

“Multi-unit activity, in particular, needs to do more heavy lifting. Multi-unit commencements need to double from current levels in order to achieve the government’s housing targets,” HIA Senior Economist Tom Devitt said. 

“This is unlikely to occur under current policies. Labour and land shortages, obstructionist regulations and punitive surcharges on institutional investors have pushed improving sentiment away from apartments back into the detached housing sector.”