Australia's Property Market - Remains the Cornerstone of National Wealth

Australia’s residential property market continues to assert itself as the dominant force in the nation’s wealth landscape, with total housing values reaching an extraordinary $11.3 trillion as of the end of April 2025. This figure dwarfs other major asset classes - property is now worth nearly three times more than the entire superannuation system, and four times more than the value of all Australian listed shares, underscoring its central role in household wealth creation.

According to CoreLogic, an estimated 55.3% of total household wealth in Australia is now held in residential real estate, reinforcing property as the country’s most significant and resilient investment class.

Market Activity Holds Steady Amid Shifting Conditions

In the 12 months to May 2025, 525,313 properties changed hands, marking a 2.7% increase compared to the previous year. The total transaction value amounted to $508.6 billion, a testament to sustained market liquidity despite tighter lending conditions and ongoing economic uncertainties.

While homes are taking slightly longer to sell, an average of four days more than this time last year, property values have remained on an upward trajectory. National home values rose 3.2% over the past year, defying broader economic headwinds and cost-of-living pressures.

Regional Australia Outpaces Capital Cities

Australia’s regional property markets have once again outperformed capital cities in annual growth. Over the past 12 months:

·      Regional markets rose by 5.3%, compared to 2.6% in capital city markets.

·      Regional Western Australia posted the strongest growth in dwelling values, surging 13.2% year-on-year.

·      Regional South Australia followed closely with a 12.9% increase, reflecting growing interest in lifestyle-driven migration and relative housing affordability outside metropolitan centres.

These trends highlight the ongoing decentralisation of housing demand, where lifestyle preferences, remote working arrangements, and better value for money continue to draw buyers away from traditional urban hubs.

Rental Markets Under Pressure

Nationally, rents increased by 3.6% over the last year, driven by tight vacancy rates and continued population growth through migration. While this provides attractive yields for investors, it also adds to affordability concerns for tenants, particularly in areas where housing supply remains constrained.

According to Domain and PropTrack, vacancy rates in many inner-city and regional hubs remain below 1%, well beneath the equilibrium point of around 2.5%, indicating a landlord’s market in most parts of the country.

Broader Implications

With residential property making up the majority of household wealth and continuing to attract both domestic and international investment, its performance has far-reaching implications for:

·      Monetary policy – Property market trends influence RBA decisions on interest rates due to their impact on household consumption and inflation.

·      Housing affordability – Rising prices and rental pressures are prompting policymakers to consider supply-side solutions, including zoning reforms and build-to-rent initiatives.

·      Investor confidence – Ongoing capital growth in regional areas and rental yields above 4% in many suburbs support continued investor interest, even in the face of rising mortgage costs.

Conclusion

As Australia’s most valuable asset class, residential real estate remains a critical pillar of the national economy. While short-term conditions such as interest rates and economic uncertainty may influence transaction timelines, the long-term trajectory of Australian housing continues to reflect strength, demand, and underlying scarcity—particularly in key growth corridors across the country.

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