The current property market stands at an important juncture, shaped by recent RBA decisions, evolving economic conditions, the recent federal election, as well as the momentum of major infrastructure projects acorss the country. This commentary attempts to paint a picture of key macroeconomic trends, the impact of monetary policy, some light regional dynamics, and possibly some key growth corridors and infrastructure developments we’re keeping an eye on..
Macroeconomic Overview and Market Performance
The Australian property market entered 2025 with a sense of cautious optimism. After a period of subdued growth and slight price corrections in late 2023 and early 2024, the market has begun to stabilise and is showing signs of a modest recovery. Nationally, property prices are forecast to rise by approximately 3% in 2025, with units expected to outperform houses in percentage growth terms, gaining around 4.6%. This restrained growth reflects the push and pull between persistent affordability challenges, tight supply, and the evolving interest rate environment.
What trends are we watching?
- In some areas, properties are taking longer to sell, indicating a shift from the frenzied activity of previous years to a more balanced market;
- Regional markets are experiencing renewed interest, supported by infrastructure investment, lifestyle changes and flexible work arrangements.
- Rental price growth has moderated but remains elevated due to ongoing supply shortages and low vacancy rates;
- The wealthiest suburban markets are rebounding, while some capital cities, notably Melbourne, are recovering from earlier declines;
The RBA’s Recent Decisions and Impact
The RBA’s monetary policy has been a central influence on property market dynamics in 2025. In February, the RBA reduced the cash rate by 25 basis points to 4.10%, marking the first rate cut after a prolonged period of tightening. This decision was prompted by a faster than expected decline in inflation, with underlying inflation falling to 3.2% in the December quarter of 2024.
April’s decision to withhold a further reduction was couched in cautious optimisim with previously identified inflation reductions continuing in line with expectations, albeit with an eye on greater foreign macroeconmic risks amid the trade negotiations in the US.
With the big four banks predicting multiple cuts in 2025, the RBA Rate Indicator is pretty evenly split on a 50 basis point cut at this month’s RBA meeting.
Implications for the Property Market
- Greater Borrowing Capacity: The rate cut has improved borrowing capacities and reduced mortgage servicing costs, leading to a resurgence in buyer confidence and market activity. We’ll caveat this with our knowledge of the recent lending changes making it harder for some investors to secure finance;
- Price Uptick: Following the rate cut, national home values increased by 0.4% in February 2025, reversing two months of declines. Melbourne and Sydney led the rebound, with growth of 0.67% and 0.5% respectively.
- Investor Sentiment: Lower rates have historically stimulated property investment, and the current environment is expected to encourage portfolio expansion, especially in markets with strong rental yields and supply constraints.
- Future Outlook: As mentioned above, major banks anticipate further rate reductions, with forecasts suggesting the cash rate could fall to between 3.10% and 3.35% by the end of the year, supporting continued market stability and gradual price growth.
Regional and Capital City Dynamics
Capital Cities
- Sydney: The market is expected to experience a year of two halves. The first half may see subdued activity due to lingering affordability issues, but further rate cuts could drive a rebound in buyer activity and price stabilisation in the latter half of 2025.
- Melbourne: After lagging behind other capitals, Melbourne has shown renewed growth following the rate cut, with improved affordability and buyer interest supporting a positive outlook.
- Perth and Adelaide: These cities are projected to see the strongest growth among the capitals, potentially up to 6%, driven by robust local economies, interstate migration, and ongoing supply shortages.
- Brisbane: Steady growth is anticipated, underpinned by population growth and infrastructure investment, though at a slightly more moderate pace compared to Perth and Adelaide.
- Hobart, Canberra, Darwin: These markets are expected to be more subdued, reflecting their position in the market cycle and local economic conditions.
Regional Markets
Regional property markets have defied predictions of a downturn, with values rising by 1% over the past quarter. The appeal of regional living, supported by remote work trends, continues to drive demand, particularly in lifestyle and affordable locations.
Major Infrastructure Projects and Growth Corridors
Infrastructure investment remains a key catalyst for property market growth, with several major projects reshaping urban and regional landscapes in 2025.
Queensland: The Development Powerhouse
- Townsville: We are closely watching the $6 billion project pipeline taking shape in Townsville. Townsville has been on our radar for some time and claimed the top spot for growth in 2024. With the region critically undersupplied, expectations are that this price action may continue for some time to come.
Victoria and New South Wales: Urban Renewal and Mixed-Use Developments
- Melbourne Quarter: This transformative project will add seven towers up to 40 storeys, providing 1,690 apartments and commercial space for 3,500 workers. Major mixed-use precincts like this are revitalising inner-city areas and supporting population growth.
- Sydney Metro and Western Sydney Airport: These infrastructure projects are enhancing connectivity and unlocking new growth corridors in Greater Sydney, particularly in the west and southwest.
Renewable Energy and Industrial Projects
- Clarke Creek Renewable Energy Project (QLD): Delivering 194 wind turbines with over 1,000MW capacity, this project is driving economic activity and employment in regional Queensland, supporting property demand in adjacent areas.
- Data Centres and Logistics Hubs: The expansion of technology and logistics infrastructure, particularly in outer metropolitan areas and in regional hubs, is creating new employment nodes and stimulating residential development.
How Investors Can Capitalise on Current Trends
How can those interested in entering the property market scene take advantage of the current landscape? Glad you asked.
- Target Undersupplied Markets: Focus on regions and corridors with persistent supply shortages and strong rental demand for superior yield potential.
- Monitor Infrastructure Pipelines: Prioritise locations benefiting from major public and private investment, as these areas typically outperform in medium to long term.
- Diversify Across Markets: A diversified approach, from locati to investment type, can help manage risk and capture growth opportunities.
- Stay Attuned to Monetary Policy: Monitor RBA decisions and macroeconomic indicators, as further rate cuts could unlock additional upside in the second half of 2025.
Summing Up
While affordability remains a concern, the recent RBA rate cut has reinvigorated buyer confidence and set the stage for renewed market activity. Investors who align their strategies with these structural trends and remain vigilant to evolving risks will be best positioned to capitalise on opportuniies in the months ahead.
for further information
At PPA, we have the skills, expertise and partnerships necessary to help you purchase quality investment properties, both NDIS and non-NDIS. If you would like to schedule an no pressure, obligation free chat to discuss your specific scenario, please email or phone us using the details on our Contact page.
Until next month.
