Wealth Street Journal: Week 9, 2025

POSTED
04 March 2025

Top 5 headlines from this week’s Australian real estate news

New home construction rises: Dwelling commencements are set to increase in 2025 and 2026, driven by investors shifting from apartments to house and land packages due to fewer off-the-plan developments.
Voters want affordable housing: A survey shows most Australians want the government to prioritise affordable housing over investor tax breaks. Experts warn that reducing incentives could shrink the rental market and push rents higher.
Foreign buyers temporarily banned: From April 1, 2025, foreign buyers are banned from purchasing existing Australian homes for two years. Experts say the impact will be minimal, as they account for only 1% of annual sales.
Stamp duty reform push: The Real Estate Institute of Australia is calling for stamp duty relief, particularly for older homeowners looking to downsize. High transaction costs are preventing people from moving and freeing up larger homes for families.
Build-To-Rent growing: Thousands of new apartments are under construction, with Victoria, New South Wales, and Queensland leading the way as more developers embrace long-term rental housing.

New home construction rises

New home construction is expected to rise in 2025 as more investors turn to house and land packages.

Oxford Economics Australia forecasts a 4.5% increase in total dwelling commencements in the 2025 financial year, followed by another 4.3% rise in 2026.

Timothy Hibbert, Head of Property and Building Forecasting, says investors are now buying a larger share of house and land packages due to a drop in off-the-plan apartment projects.

“We used to see first home buyers make up a much bigger share, but their numbers have fallen back quite significantly when it comes to house and land purchases,” he says.

Investor demand is rising in key markets. In Victoria, 76% more investors took out loans for new home construction in December 2024 compared to five years ago. In New South Wales, the figure was 71%.

The same trend is emerging across other states.

Voters want affordable housing

A new survey reveals most Australians want government funding to focus on affordable housing rather than tax breaks such as negative gearing for investors.

The survey, commissioned by Everybody’s Home, polled 2,500 voters. Almost half said affordable housing should be the priority, while only 17.5% supported investor tax concessions.

More than a third of respondents said housing costs were their biggest financial pressure, followed by groceries (26%), energy bills (16%), and insurance (9%).

Maiy Azize from Everybody’s Home says more funding for affordable housing could improve affordability.

However, the Property Investment Professionals of Australia (PIPA) warns that cutting investor tax incentives is already pushing investors out of the market and that’s not good news for renters.

When investors leave, the rental supply shrinks, making it even harder for tenants to find homes and driving rents higher.

Foreign buyers temporarily banned

The Federal Government is banning foreign buyers from purchasing existing Australian homes for two years to help ease the housing crisis.

The ban starts on April 1, 2025, and applies to all overseas buyers, including temporary residents. The policy will be reviewed after two years.

However, industry experts say the impact will be minimal. International real estate technology group Juwai IQI reports that only 1,600 transactions per year will be affected, out of the 520,000 total home sales in Australia.

Managing Director, Daniel Ho, says fewer than 5,000 homes are sold to foreign buyers annually, and only a third of those are existing properties. That’s just 1% of all transactions.

Temporary residents will still be allowed to buy new homes in Australia.

Treasurer Jim Chalmers says the government is also cracking down on foreign investors holding undeveloped land to free up land to build more homes more quickly.

Stamp duty reform push

The Real Estate Institute of Australia (REIA) is calling for stamp duty to be removed for older Australians wanting to downsize.

REIA President, Leanne Pilkington, says stamp duty makes moving too expensive, preventing homeowners from selling and freeing up larger properties for families.

She believes replacing stamp duty with land tax would be one of the most significant real estate policy reforms.

“While the economic benefits are clear, most state governments remain hesitant to implement such a major change,” she says.

Pilkington says stamp duty is a major financial hindrance to buying and selling.

“Effectively, you’re looking at tens of thousands of dollars just in tax every time you move,” she says.

“The impact is that people stay put in homes that don’t suit them anymore. Older people stick around in large homes while young families squeeze into tiny apartments because the cost of moving is just too high.”

This week, Queensland scrapped stamp duty for first-home buyers purchasing new builds.

Build-To-Rent growing

Australia’s build-to-rent (BTR) sector is expanding, with over 4,300 new apartments delivered in 2024.

Knight Frank predicts even more growth in 2025, with 8,900 BTR apartments under construction and another 20,000 approved for development over the next five years.

Victoria leads the sector, with 25,538 units completed, under construction, or planned as of Q4 2024. New South Wales follows with 15,089, and Queensland has 14,390.

Knight Frank Partner, John Paul Stichbury, says the BTR market has been growing steadily since 2018.

Since then, 19,308 apartments have been delivered or are under construction, with another 40,191 in the pipeline.

Smaller markets are also embracing BTR. In the ACT, 1,723 units are either completed, under construction, or planned. Western Australia and South Australia have 1,568 and 1,191, respectively.

Catching up on Australian real estate news?

Read our last Australian real estate news article covering:

Market confidence swiftly rising: 65% of real estate agents predict strong property price growth this year, with Melbourne emerging as a key investment hotspot.
Auction market gains momentum: Auction volumes rose 13% last week, with a 67.4% clearance rate—the highest since Oct 2024, signalling renewed buyer confidence ahead of potential interest rate cuts.
Property rewards long-term investors: House prices doubled in 29 towns, with 50 more growing 70%-90% in five years, with regional markets leading the charge.
Infrastructure key to supply: HIA calls for a $12B infrastructure boost to unlock land supply and accelerate new home construction to address a 60,000-home shortfall.
More listings, more choice: Property listings are up 10.3% year-on-year, with 243,642 homes now on the market. Brisbane, Perth, and Sydney led the way in January.

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