Australian real estate heats up in 2025 amid global shifts

The Australian housing market is experiencing a significant surge in 2025, with national dwelling prices reaching unprecedented levels. This growth is largely fueled by increased investor confidence, policy changes, and renewed international interest, despite ongoing supply challenges.

According to Elite Agent, the national mean dwelling price exceeded AUD1 million (USD670,000) for the first time in January 2025. Major markets such as Melbourne, Sydney, and Brisbane are witnessing robust activity, driven by strong demand and the prospect of further interest rate cuts.

While borrowing conditions are expected to improve with anticipated interest rate reductions, the market faces challenges. High construction costs and labour shortages are delaying project completions, limiting supply even as demand grows.

International buyers are particularly drawn to new apartments and townhouses near universities and lifestyle centres. Offshore buyers, in particular, may target new apartments and townhouses in key education and lifestyle precincts, boosting activity in areas close to universities and the CBD.

The Australian rental market remains tight, offering attractive yields for investors. This, combined with increased purchasing power from lowered interest rates, is expected to boost both domestic and international investor activity.