This week’s Australian real estate news: Top 5 headlines

Explore the newest developments in Australian real estate news:

1. Property price growth to continue: Smaller capital cities like Perth, Brisbane, and Adelaide will lead property price growth in 2025, while Sydney and Melbourne may initially decline before rebounding post-interest rate cuts.
2. Regional demand outpacing supply: Regional living demand has doubled, causing housing shortages and lower rental vacancy rates, with 76,000 job vacancies but insufficient infrastructure.
3. Strata developments the solution: Australia has the potential for 3 million new strata units, with Melbourne leading at 1.2 million, as low-rise developments near transport hubs encounter less community resistance.
4. Affordable pockets in capital cities: Affordable properties still exist in capital cities, with units offering more options than houses, especially in suburbs with strong liveability standards.
5. Student housing has doubled: Purpose-built student accommodation has doubled in a decade, with 132,700 beds available, driven by private investment amid declining affordability in traditional rentals.

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Property price growth to continue

Property prices are expected to keep growing, particularly in Australia’s smaller capital cities in 2025.

SQM Research’s 2025 Boom and Bust Report predicts property values could increase by 1% to 4%.

This forecast assumes a likely 25 to 50 basis point rate cut in mid-2025.

Perth is set to lead the growth, with prices increasing by 14% to 19%, followed by Brisbane (9% to 14%) and Adelaide (8% to 13%).

Sydney and Melbourne, however, are expected to experience price drops of up to 5%.

“Our two largest capital cities, along with Canberra and Hobart, will start 2025 off in the red,” says SQM Research Managing Director, Louis Christopher.

“We are currently recording dwelling price falls in each of these cities.”

“However, once interest rate cuts do occur, we are expecting a speedy bounce in demand for Sydney and Melbourne in particular (where both are still) experiencing underlying housing shortage relative to the strong population growth rates.”

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Regional demand outpacing supply

Demand for regional living continues to grow, with 40% of city residents considering a move to the regions.

Regional Australia Institute (RAI) research shows the number of people considering a move has doubled from 20% in May 2023 to 40% in November 2024.

RAI CEO, Liz Ritchie, says regional demand has never been higher.

The RAI’s annual progress report shows regional rental vacancy rates have dropped from 1.5% in 2023 to 1.3% in 2024. At the same time, building approvals in regional areas have declined by 9.4%.

Ritchie warns that regions need better infrastructure and services to handle the population shift.

“Many regions are already struggling with housing, particularly rental markets, and until region-specific policy measures are put in place, this will only be further magnified,” she says.

Despite housing pressures, Ritchie notes there are nearly 76,000 job vacancies across regional Australia.

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Strata developments the solution

Australia has close to 1.3 million sites suitable for new strata developments.

CoreLogic and Archistar analysed capital city land without existing strata developments, focusing on areas where local regulations allow higher-density housing.

Their findings reveal room for up to three million new units. Nearly 500,000 of these could be built in areas with low complexity, meaning fewer barriers slowing development.

The research was looking to identify sites that could accommodate smaller projects – on average 2.5 units per site.

Melbourne has the highest potential for this type of development, with capacity for 1.2 million new strata units, followed by Sydney (934,000 units), Brisbane and Adelaide (400,000 each), Perth (63,000), ACT (59,000), Hobart (58,000) and Darwin (4,000).

Over half of the identified sites are within 2km of a train station.

CoreLogic Research Director, Tim Lawless, highlights the appeal of low-rise strata units like townhouses, duplexes, and triplexes.

“This style of infill development is often more sympathetic to the local character and tends to encounter less resistance from local residents who are often wary of higher densities,” he says.

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Affordable pockets in capital cities

Affordable properties still exist in capital cities, but buyers may need to consider units instead of houses.

PRD’s Affordable and Liveable Property Guide reveals that in the second half of 2024, 48.7% of unit markets and 29.2% of house markets within a 20km radius (10km in Hobart) of the CBD were affordable.

Affordability was defined as areas with median prices below the relevant capital city metro median.

In Brisbane, Strathpine, Griffin, and Alexandra Hills were the most affordable suburbs for houses and Springwood, Richlands and Griffin for units.

In Sydney, Chester Hill, Granville and Villawood were the most affordable for houses and Bankstown, Lakemba and Merrylands for units.

In Melbourne, Albanvale, Ardeer and Lalor were the most affordable house markets and Williams Landing, Bundoora and Kensington for units.

In Hobart, Glenorchy, Risdon Vale and Rokeby were the most affordable house markets and Berriedale, Glenorchy and Lutana for units.

PRD Head of Research, Dr. Diaswati Mardiasmo, notes all these suburbs also meet high liveability standards.

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Student housing has doubled

Student accommodation in Australia has almost doubled over the past decade.

The number of student accommodation beds has increased due to a surge in private developers investing in purpose-built student housing.

The Student Accommodation Benchmarks report shows there are now 132,700 student accommodation beds in Australia.

Over half (53%) of these are owned or managed by private sector operators.

Victoria leads with 43,982 beds, followed by New South Wales (34,069) and Queensland (23,353), ACT (10,226 beds) and South Australia (9,133).

Another 29,500 beds are in the pipeline, with 7,400 under construction, 14,900 approved, and 7,200 awaiting approvals.

Student Accommodation Council Executive Director, Torie Brown, says there is another 29,500 beds in the supply pipeline, with about 7,400 already in the construction stage, 14,900 approved, and 7,200 awaiting development approval.

This growth coincides with a Rental Affordability Index showing that private rentals are less affordable than ever.

Many students now struggle to even afford shared housing.

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