Australian Property Market Report – July 2025
Aaron Tan · 18 July 2025
National Overview
Australia’s housing market has continued its upward trend in July 2025, driven by population growth, tight supply, and improving consumer confidence. Following a 0.4% rise in June, national dwelling values increased by 0.6% in July, highlighting the market's resilience despite higher borrowing costs and lingering inflation.
The real estate recovery is not uniform, however. Larger capital cities are experiencing modest gains, while mid-tier and smaller capitals continue to outperform. Auction clearance rates rose slightly, days on market decreased, and rental vacancies remain historically low across the board.
What’s Fueling the Market?
- Undersupply of Homes: New dwelling completions remain well below population growth. Delays in construction and cost escalations mean fewer homes are hitting the market.
- Population Growth: Net overseas migration continues to surpass expectations, creating strong demand for both rentals and housing purchases.
- Investor Return: Rental yields are at decade highs in some regions, especially in Perth, Adelaide, and Brisbane. Many investors are entering or re-entering the market to capitalise on rising rents.
- Consumer Confidence: While still below average, sentiment has improved in anticipation of potential interest rate relief.
Interest Rate Outlook: When Will They Fall?
The RBA held the cash rate steady at 3.85% in July. Inflation has fallen to 3.2%, prompting analysts to believe we could see a rate cut before the end of 2025. If inflation continues to ease and unemployment stays low, monetary policy may loosen as early as Q4 2025.
If rate cuts arrive:
- Buyer demand could spike.
- Borrowing power will improve.
- Markets already under pressure from demand (e.g., Perth, Brisbane, Adelaide) could see accelerated growth.
Forecast: What Happens Next?
The outlook for the remainder of 2025 is cautiously optimistic. Here’s what we expect:
- Steady price growth across most capitals, led by Brisbane, Perth, and Adelaide.
- Increased investor activity as interest rate relief becomes more likely.
- Continued rental pressure with vacancy rates under 1% in many cities.
- More first-home buyers entering the market as consumer sentiment lifts.
Opportunities for Buyers
Smart investors are targeting:
- Undersupplied suburbs with planned infrastructure and job nodes.
- Medium-density housing corridors in Brisbane, Perth, and outer-ring Melbourne.
- High-yield markets like outer Adelaide and select regional centres.
Market Challenges
- Affordability: Stretched in Sydney and Melbourne, where many buyers are at borrowing limits.
- Tight credit: Despite interest rate stability, serviceability assessments remain strict.
- Cost of living pressures: Energy and rent inflation continue to impact household budgets.
State-by-State Performance – July 2025
Queensland (Brisbane, Gold Coast, Regional QLD)
- Monthly Growth: +1.1%
- 12-Month Growth: +9.3%
- Rental Vacancy: 0.9%
Brisbane continues to outperform, driven by affordability, strong population growth, and limited housing supply. Regional areas like the Sunshine Coast and Toowoomba remain attractive for remote workers and investors.
Outlook: Continued upward pressure on prices, especially with Olympic infrastructure build-up.
New South Wales (Sydney, Regional NSW)
- Monthly Growth: +0.4%
- 12-Month Growth: +3.2%
- Rental Vacancy: 1.1%
Sydney remains steady. Premium suburbs and coastal lifestyle areas outperform, while affordability limits growth in outer-ring suburbs.
Outlook: Moderate price growth with potential uplift if interest rates fall.
Victoria (Melbourne, Regional VIC)
- Monthly Growth: +0.3%
- 12-Month Growth: +2.7%
- Rental Vacancy: 1.4%
Melbourne’s recovery is slower due to higher investor stock and softer migration flows. Middle-ring family suburbs are doing best.
Outlook: Gradual recovery; stronger performance expected with rate relief.
Western Australia (Perth, Regional WA)
- Monthly Growth: +1.2%
- 12-Month Growth: +11.5%
- Rental Vacancy: 0.6%
Perth remains the nation's hottest market. Low supply, high yields, and interstate migration are driving competition.
Outlook: Strong growth expected to continue through 2025.
South Australia (Adelaide, Regional SA)
- Monthly Growth: +0.9%
- 12-Month Growth: +7.8%
- Rental Vacancy: 0.7%
Adelaide remains a favourite among investors due to its affordability and strong rental yields. Northern and southern corridors remain in demand.
Outlook: Stable growth with strong fundamentals.
Tasmania (Hobart, Regional TAS)
- Monthly Growth: -0.2%
- 12-Month Growth: -0.9%
- Rental Vacancy: 1.0%
Hobart is stabilising after years of strong growth. Affordability limits and softer migration are weighing on prices.
Outlook: Flat or slight declines. Low growth environment for now.
ACT (Canberra)
- Monthly Growth: 0.0%
- 12-Month Growth: +0.7%
- Rental Vacancy: 1.1%
Canberra’s market is stable with limited new supply. Government employment and high incomes provide a floor to prices.
Outlook: Modest growth; performance will improve if rates drop.
Northern Territory (Darwin)
- Monthly Growth: +0.2%
- 12-Month Growth: +3.1%
- Rental Vacancy: 1.3%
Darwin is stable with moderate demand and higher-than-average rental yields.
Outlook: Modest price growth possible with broader investor confidence returning.
Final Thoughts
The Australian property market in July 2025 continues to show resilience and strength despite global economic headwinds. Demand continues to outstrip supply, rents are rising, and buyers are anticipating a softer interest rate environment.
We expect the second half of 2025 to bring more certainty, possibly a rate cut, and renewed competition for well-located, high-quality property. This is a time for strategic investors to act before the broader market catches on.