Australian Property Market Outlook - FY2025-26

As we enter the 2025–26 financial year, Australia’s property market is firmly in recovery mode. National home values are rising, buyer sentiment is improving, and supply remains structurally constrained. According to CoreLogic, national home values reached a record average of $837,586 in June 2025, supported by five consecutive months of growth and recent interest rate cuts. The message is clear: buyer urgency is back, and the next phase of the property cycle is underway.

The Shift from FOMO to COMO

Earlier this year, Domain introduced the concept of COMO, the “certainty of missing out”, capturing the evolving housing market dynamic. Buyers, facing limited listings and fewer quality properties, have shifted from speculative activity driven by fear of missing out (FOMO) to more competitive buying behaviour as they anticipate missing prime opportunities.

This shift reflects a tightening market where supply continues to fall well short of government targets, with forecasts indicating Australia will miss its housing construction goals by over 260,000 dwellings in the coming years. Population growth remains robust, fueled by migration and natural increase, exacerbating the supply-demand imbalance. The result is intensifying pressure across both purchase and rental markets, pushing prices and rents higher and challenging affordability.

Capital City Growth Forecasts – FY2025–26

• Brisbane: 6%–10% growth. Brisbane’s growth story remains underpinned by ongoing infrastructure investment, including transport upgrades and urban renewal, alongside comparatively affordable housing prices and strong interstate migration. Suburbs offering family-friendly environments and proximity to employment hubs in the $700k–$1.2M price range are especially competitive.
• Perth: 7%–12% growth. Perth continues to outperform expectations, supported by strong rental yields, low vacancy rates (often below 1%), and relatively affordable entry points for investors and owner-occupiers alike. This makes it a hotspot for both local and interstate buyers.
• Adelaide: 5%–9% growth. Once overshadowed by larger capitals, Adelaide is attracting renewed interest due to its stable economy, growing industries, and supply scarcity, particularly in well-established middle-ring suburbs. Affordability relative to Sydney and Melbourne further boosts its appeal.
• Sydney: 2%–5% growth. Sydney’s market recovery is uneven. While prime and lifestyle precincts show resilience, affordability constraints and high household debt levels weigh heavily on outer suburbs, slowing growth momentum. Buyer competition remains selective and focused on established family homes.
• Melbourne: 1%–4% growth. Melbourne faces a similarly mixed outlook. Although new listings are returning, buyer activity is cautious. Townhouses and family homes in mature suburbs are outperforming the high-density apartment segment, which remains oversupplied in some areas.
• Canberra, Hobart, Darwin: -1% to +2% growth. These smaller capitals are more sensitive to economic and policy shifts, with slower population growth and subdued investor demand limiting their price growth prospects.

Key Market Drivers

Interest Rate Environment

The Reserve Bank of Australia’s easing cycle has improved borrowing capacity, supporting buyer confidence. After a period of tight monetary policy aimed at curbing inflation, recent interest rate cuts have reduced borrowing costs, allowing more buyers to re-enter the market. However, uncertainty remains over the timing and scale of further rate moves, which could influence momentum.

Chronic Undersupply

Australia’s housing undersupply remains acute, driven by several factors including construction cost inflation, planning constraints, and labour shortages in the building industry. The shortfall in new dwellings, estimated to exceed 260,000 units over the next few year,continues to underpin upward pressure on prices and rents.

Rental Market Dynamics

The rental market is tightening sharply. Vacancy rates remain below 1% in most major cities, pushing rents higher and driving renewed investor interest. This trend benefits both investors seeking yield and tenants facing affordability challenges. However, rising interest rates and tighter lending criteria may moderate investment activity over time.

Lifestyle and Infrastructure Trends

Buyers are increasingly prioritizing lifestyle factors such as access to quality transport links, schools, healthcare, and employment opportunities. This has led to rising demand in emerging outer metropolitan suburbs that offer a balance of affordability and amenity. Infrastructure projects and urban renewal initiatives in these areas are further enhancing their attractiveness.

Economic and Demographic Context

Australia’s broader economic outlook supports the property market recovery. Forecast GDP growth of around 2.5% to 3% in 2025–26, continued job growth, and historically low unemployment rates provide a solid foundation for housing demand. Migration intake is expected to remain strong as Australia rebuilds its population post-pandemic, adding to housing demand in key regions.

That said, affordability remains a significant challenge. Median house prices relative to incomes remain elevated in many capitals, particularly Sydney and Melbourne, necessitating a strategic and tailored approach to property acquisition.

The Greenrock Advisory Perspective

At Greenrock Advisory, we adopt a proactive and research-driven approach to property investment and acquisition. We pride ourselves on anticipating market shifts and helping clients position their portfolios to capture emerging opportunities while managing risks.

Whether you are an investor aiming to scale your portfolio or a first-time buyer establishing your foundation, success in today’s complex market requires more than timing,  it requires a clear, strategic plan informed by deep market insights.

If you would like to explore property opportunities tailored to your financial goals and risk profile, Greenrock Advisory is ready to guide you through every stage of the journey.

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Resources

CoreLogic, Domain, RBA commentary, and Australian housing reports

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