08/01/2025
As we enter 2025, the Australian property market is poised for significant shifts that will affect both buyers and investors. After a year marked by fluctuating interest rates and varying market conditions, 2025 brings new opportunities and challenges for mortgage brokers who are guiding clients through the home buying and investment process. Staying ahead of emerging trends will help brokers offer valuable advice to their clients, whether they are first-time homebuyers, seasoned investors, or those looking to upsize.
Here are five key trends in Australia’s property market that are expected to shape the year ahead.
1. Affordable Markets Continue to Outperform
In recent years, affordable housing markets have consistently outperformed their more expensive counterparts, and this trend is set to continue into 2025. While high interest rates in 2024 slowed overall market growth, more affordable regions – such as those in Western Australia, South Australia, and Queensland – remain attractive to investors looking for opportunities with lower entry costs.
The Reserve Bank of Australia (RBA) is expected to reduce the cash rate by only a modest 0.5% to 1% in 2025, meaning borrowing costs will still be relatively high. For many, this makes affordable housing markets even more appealing, as they offer lower purchase prices that help mitigate the impact of high borrowing costs. For mortgage brokers, understanding these regional dynamics and advising clients on where to buy can make all the difference in helping them find both a home and an investment with long-term potential.
2. Rental Market Trends: Slowing Growth but Tight Supply
Rental growth in many Australian cities has slowed, with wage increases not keeping pace with rising rental prices. However, certain areas such as Greater Adelaide and the ACT are seeing rents rise at a faster rate than the national average. Despite this slowdown, vacancy rates remain critically low, primarily due to strong population growth, reduced household sizes, and limited new housing supply.
This ongoing tightness in the rental market is likely to influence purchasing behaviour. As rental demand remains high, many renters may look to transition into homeownership, potentially putting upward pressure on sales prices. Mortgage brokers should keep an eye on rental market trends in specific regions, as this could help identify where homebuyers may be looking to enter the market or investors may want to focus their efforts.
3. Shifting Investment Focus: Capital Gains Over Rental Yields
We are likely to see a shift in the types of properties that attract investors. In 2024, certain regions experienced improvements in rental yields, prompting investors to reconsider their focus. Areas where rental returns are moderate yet stable – especially properties priced between $600,000 and $1.1 million – are expected to see increased investor activity in the year ahead.
Markets such as coastal regions in New South Wales, parts of Melbourne, Brisbane, and the Gold Coast will continue to draw attention, as they offer opportunities for capital growth combined with moderate rental yields. Mortgage brokers can help guide investor clients to these markets by assessing financing options that maximise investment potential and align with their long-term financial strategies.
4. Demand shifts due to Regional Migration
Over the past few years, Australians have increasingly migrated from major cities like Sydney and Melbourne to regional areas, seeking better affordability, lifestyle options, and job opportunities. This migration trend is expected to persist in 2025, with many people moving to smaller capitals and regional centres where the cost of living is lower and housing is more affordable.
As more people look to move away from crowded city canters, the demand for housing in regional areas will likely increase.
Mortgage brokers can support clients by providing insights into these emerging hotspots, helping them secure loans for homes in growing regional markets that may offer better long-term prospects.
5. Upsizing: Homeowners Leverage Capital Gains for Larger Properties
As the property market stabilises in 2025, another trend gaining momentum is upsizing. Homeowners who have seen their properties appreciate in value over recent years may choose to leverage their capital gains to move into larger homes. This trend is particularly evident in suburban markets, where families are increasingly seeking more space due to ongoing shifts in remote work and lifestyle preferences.
This upsizing trend is expected to create more activity in higher-priced property markets as people upgrade to homes with more room. Mortgage brokers should be prepared to help clients navigate the upsizing process by offering advice on how to maximise their equity, explore financing options, and assess the right property based on their evolving needs.
For mortgage brokers, staying informed about these key trends in the Australian property market will be critical to supporting clients through the year ahead.
2025 is shaping up to be a year where affordability remains at the forefront, regional migration continues to impact housing demand, and investors seek properties that balance potential for capital growth with manageable rental yields.
The year 2025 also presents an opportunity for mortgage brokers to educate their clients about the nuances of the current market and help them make informed, strategic decisions. Whether it’s guiding first-home buyers to affordable areas, assisting investors in finding high-yield properties, or advising homeowners on upsizing options, a strong understanding of these trends will be key to success.
