30/04/2025
Australia’s property and mortgage markets are showing clear signs of renewed momentum, with fresh data revealing a strong uptick in lending activity and property settlements, particularly in more affordable states. The latest quarterly insights from PEXA point to growing competition among lenders, increasing investor appetite, and shifting settlement patterns as key market trends shaping the current housing landscape.
Lending Activity Accelerates
In a sign of renewed confidence, new mortgage lending across the mainland states rose 4.4% year-on-year during the March quarter. More than 118,000 new loans were settled, representing a total value of $80.2 billion, with $73.5 billion directed towards residential purchases. This marks a 7.6% annual increase, highlighting the growing appetite for property finance.
This surge follows the Reserve Bank of Australia’s recent 25-basis point cut to the cash rate, which has intensified competition in the mortgage market. Lenders are responding quickly by reducing fixed-rate offerings and introducing cashback incentives to attract borrowers.
Refinancing on the Rise
One of the most immediate responses to the rate cut has been in the refinancing space. Over 91,000 refinances were settled in the March quarter – up 12.5% from the same period last year – as homeowners seek better loan terms amid falling rates and increased lender competition.
Investor Activity Drives Growth
Investor lending has taken the lead in driving housing finance growth, outpacing owner-occupier borrowing across the country. This trend is particularly strong in Queensland, Western Australia, and South Australia, where relative affordability compared to Victoria and New South Wales continues to draw buyers.
These investment-driven markets are benefiting from double-digit growth in loan commitments, a trend that looks set to continue throughout 2025 as investors target rental returns and capital growth opportunities in less overheated markets.
Queensland Maintains Lending Dominance
Queensland continues to hold the top position in terms of new loan volumes, a status it has maintained since mid-2021. Strong population growth and ongoing housing affordability have underpinned this trend, alongside recent government efforts to stimulate residential construction through inquiries and planning reforms.
Among the states:
- South Australia recorded the strongest annual growth in loan volumes (+8.7%),
- Queensland held steady with robust numbers,
- Western Australia saw a slight decline (-3.2%).
Settlement Activity Shifting Towards Regional States
National property settlements rose modestly by 1.2% year-on-year in the March quarter, with over 156,000 transactions finalised. Queensland led the pack with more than 43,500 settlements, while South Australia and Victoria showed the strongest annual growth in settlement volumes.
Despite seasonal disruptions such as Cyclone Alfred and Easter holidays, Queensland’s settlement volumes remained resilient, growing 1.5% in March alone. Median residential prices in Greater Brisbane and Regional Queensland also jumped 12.3% and 13.6% respectively over the past year – clear signs of sustained demand.
Commercial Market Remains Uneven
The commercial property sector showed mixed results. Queensland overtook Victoria for the second-highest number of commercial settlements, recording a 15.2% annual increase. New South Wales retained the highest market value at $7.7 billion, but total volumes were down compared to last year, suggesting some softness in the state’s commercial real estate sector.
Outlook: Affordability Eases but Risks Persist
The recent rate cut is providing immediate relief for borrowers, with monthly repayments falling for many households. For a $500,000 loan, this translates to savings of around $80 per month. Simultaneously, building approvals have increased across all mainland states, suggesting future improvements in housing supply.
However, affordability challenges linger in Sydney and Melbourne, where price growth continues to outpace wage growth. While the current momentum in lending and settlement activity is encouraging, analysts warn that ongoing global uncertainties – including trade tensions and financial market volatility – could temper consumer confidence in the months ahead.
Market Takeaway
The current rebound in mortgage activity, especially in regional and affordable states, underscores a broader shift in Australia’s property dynamics. With lenders stepping up competition and investors returning to the market, the remainder of 2025 could see further growth – particularly in Queensland, South Australia, and Western Australia – provided macroeconomic risks remain contained.
