Australian House Prices Surge 12% in February 2025 Market Update
Market Update – Feb 2025 reveals a remarkable change in Australia’s property market. Oxford Economics predicts Melbourne house prices will surge 21% in the next three years.
National dwelling values showed a minor dip of 0.03% in January, but the outlook remains positive. Real estate agents are optimistic, with 65% predicting house prices will rise in 2025. Queensland leads these forecasts with 70% growth expectations.
Perth shows exceptional promise with a 15.38% price increase in the last year. The city’s relative affordability and strong population growth drive this impressive
performance.
Australian Property Market Hits Record High in February – Market Update Feb 2025
Australian residential property values have hit a record AUD 16.97 trillion in early 2025. National price growth exceeds expectations. House prices in Australia will rise by 3.3% over the next 12 months. Unit prices show even stronger momentum with a projected 4.6% increase in 2025.
Perth stands out among capital cities with an expected house price growth of 4%. Canberra and Melbourne aren’t far behind, both showing 3.5% growth.
Supply shortages continue to push prices higher. The numbers tell the story – only 163,760 dwelling approvals were recorded in 2024. This is a big deal as it means that the numbers fall short of the National Cabinet’s target of 240,000 new homes per year.
Regional markets outperform capitals Regional Australia shows remarkable strength in the property sector. Combined regional areas saw dwelling values climb 1.2% in the last quarter.
The standout performers with market update Feb 2025 regional markets include:
• Western Australia’s Albany and Bunbury with 7.7%
and 6.2% quarterly growth
• Northern NSW’s Lismore with 5.5% quarterly growth
• Queensland’s Townsville with 4.7% quarterly growth
Regional markets have become more attractive due to their better affordability compared to capital cities. The price gap between cities and regions has now widened
to AUD 366,957. There’s another reason behind the strong performance in regional areas. Remote working has become a permanent fixture. The flow of people moving to regional areas remains higher than before the pandemic.
Western Australia and Queensland lead the pack in regional performance. These regions thrive on strong economic foundations across agriculture, tourism, and
mining. Better affordability keeps driving regional growth. Yet only six regional areas saw yearly price jumps above 10%. Bunbury topped the list at 15.8%, while Central Queensland’s Bundaberg and Rockhampton both reached 12%.
Melbourne Housing Market Rebounds After Two-Year Slump
Melbourne’s property market shows signs of recovery after a 3% decline in 2024. The city’s housing sector, currently valued at a median of AUD 1,184,967, points
toward growth. Eastern suburbs lead recovery Property values in Melbourne’s eastern suburbs have bounced back strongly. Suburbs like Mount Waverley,
Glen Waverley, and Blackburn show notable gains. The eastern corridor thrives because:
• Mitcham and Ringwood’s infrastructure upgrades
make them more appealing
• Balwyn North stands within 5% of previous peak
values
• Greensborough has almost recovered to former highs
Market Update Feb 2025 – Affordability attracts new buyers
New buyers are flocking to Melbourne’s market because of its affordability. Buyers can enter the market with deposits as low as AUD 76,450. Properties in select areas sell at 30% below construction costs. Value opportunities have caught the attention of interstate buyers. Melbourne’s property values remain 4.9% lower for houses and 2.6% lower for units compared to their peaks.
Bank of Melbourne predicts positive growth as interest rates are expected to drop. Several factors drive this market change, including returning international students and migrants.
Rental vacancy rates boost buyer confidence. The tight rental market encourages more first-home buyers to purchase properties. Recovering suburbs show strong
auction clearance rates in property listings. Family-friendly areas benefit from this affordability advantage. Premium locations see renewed interest in
two-bedroom apartments. Young families increasingly choose townhouses as they offer a sweet spot between apartments and houses.
Interest Rate Cuts Drive Buyer Confidence
The property market dynamics are changing as the Reserve Bank of Australia cuts interest rates. The cash rate has dropped to 4.1% from 4.35%.
RBA signals multiple rate reductions – Market Update Feb 2025
Each percentage point drop in the cash rate will boost national dwelling values by 6.1%, according to CoreLogic. Homeowners will save AUD 229.35 yearly on
their average loan repayments. The market expects several rate cuts through 2025. Experts predict rates will drop to 3.85% by February 2026. This means borrowers can access larger loans. Single income borrowers can now get AUD
18,347.88 more in loans. Dual-income households can borrow an extra AUD 35,166.78. Families with one full-time and one part-time worker have access to AUD 22,781.95 more in lending.
Banks compete for mortgage customers
Bank competition has reached new heights. Major banks are using their subsidiary brands to gain market share:
1) Commonwealth Bank runs Bankwest and Unloan for digital-only services
2) NAB’s UBank digital branch offers lower advertised rates
3) ANZ Plus provides economical home loan options
4) Westpac uses its RAMS brand to compete
The mortgage market continues to evolve. The competition between major banks seems to be cooling. Regional banks struggle to maintain their market
share. Refinancing grew by 10% across the country in the December quarter. New homebuyers can now enter the market with deposits starting at AUD 76,450.
Investment lending jumped 24% compared to last year’s December quarter. Western Australia and Queensland lead this investment boom.
Foreign Investors Return to Australian Real Estate
Foreign investment in Australian residential property hit AUD 7.49 billion in 2022-23. This represents a major uptick from previous years. Asian investment surges post-pandemic Chinese buyers dominate foreign investment with AUD 1070.29 million spent in the July-September 2023 quarter alone. Investors from Hong Kong, Vietnam, India, and Taiwan come next, each investing AUD 152.90 million.
Recent Treasury data reveals a 40% jump in overseas buyer approvals last quarter. Sydney, Melbourne, and Brisbane have become the hottest spots for foreign
investment.
Effect on local market dynamics
Overseas buyers typically choose new, expensive properties in city areas. These locations draw the most
foreign money:
5) Sydney: Mosman, Chatswood, Eastern Suburbs
6) Melbourne: Toorak, South Yarra, Box Hill
7) Brisbane: New Farm, Ascot, Sunnybank
Property experts say foreign buyers often buy homes where their children study in Australia. Banks now support overseas income up to 50% loan-to-value ratio for buyers who qualify. Government policy changes.
The Albanese Government unveiled tough measures starting April 2025. These rules will stop foreign investors from buying established homes for two years until March 2027.
The government set aside AUD 8.72 million over four years to enforce compliance. They added AUD 13.61 million to support an audit programme that targets land banking by foreign investors.
Foreign buyers now pay triple the application fees for established homes. The government has doubled vacancy fees on all foreign-owned properties bought since May 2017.
New regulations push foreign investment toward new housing developments.
Foreign investors must build on vacant land within set timeframes or risk penalties. These changes affect temporary residents and foreign- owned companies looking to buy Australian property. Some exceptions exist when investments help increase housing supply.
The new rules should make more houses available for Australian residents. Foreign buyers make up just 2% of the Australian property market right now.
Infrastructure Projects Boost Property Values
Property market dynamics in Australia are changing due to major infrastructure developments in early 2025. Property values close to transport hubs show increases
between 6.9% to 9.7%.
Transport developments increase suburb appeal Victoria’s biggest transport upgrade in 40 years, the Melbourne Metro Tunnel, will open in September 2024. Properties within 800 metres of Sydney’s Metro Northwest Line have seen 10-12% value increases since 2019.
The growth around EastLink has been remarkable. Areas like Blackburn, Dandenong, and Mitcham grew by 25%. Brisbane’s Cross River Rail project connects
Dutton Park to Bowen Hills and boosts nearby property values.
Properties near train stations now command premium
Sydney’s accessibility got better with the WestConnex project, a 33-kilometre motorway network. The Western Sydney Airport development promises to increase
property values over time.
New community facilities attract buyers
Healthcare facilities drive property value growth. The Barwon Women’s and Children’s Hospital in Geelong and Queen Elizabeth II Hospital in Ringwood East bring workers and supporting businesses to these areas.
Properties near major shopping centres can fetch rental premiums of 5-8%. Areas like Chatswood and Parramatta show strong tenant demand because of their lifestyle amenities.
Brisbane’s Queen’s Wharf development shows successful civic renewal. The community infrastructure has:
8) Schools and educational facilities
9) Parks and recreational spaces
10) Healthcare centres
11) Retail and entertainment precincts
Professionals prefer properties with high-speed internet and continuous connection options. Communities with excellent digital infrastructure tend to have stronger local economies.
The Victorian Transport Plan will invest AUD 58.10 billion to create Australia’s best transport system.
Suburbs near developments like the North East Link expect significant value increases. Infrastructure spending creates waves in property markets. Areas with planned or completed projects ended up showing 15-20% value increases within five years.
Conclusion
Australian property markets continue to show impressive strength in multiple sectors. Regional areas now lead the way in price growth, and capital cities show steady appreciation. Perth emerges as a standout performer with a 15.38% annual increase, setting new standards for market performance.
Melbourne has bounced back, which signals renewed confidence after its recent downturn. Nationwide buyer confidence has improved due to lower interest rates.
Properties close to infrastructure projects have seen values climb between 6.9% to 9.7%, and location remains a key driver of market success.
The market’s depth has increased through foreign investment, though new regulations now push investors toward new developments. Market experts predict sustained growth through 2025, driven by strong population increases and housing shortages.
Economic stability and infrastructure spending paint a positive market outlook. Australian residential property values have reached AUD 16.97 trillion, which shows the market’s resilient fundamentals. These elements suggest continued growth will extend through 2025 and beyond.”
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FAQs 1
Q1. What is the projected growth for Australian house prices in 2025? Australian house prices are expected to rise by 3.3% in 2025, while unit prices are forecasted to increase by 4.6%. Perth is leading the capital cities with a projected house price growth of 4%.
Q2. How are regional property markets performing compared to capital cities? Regional markets are outperforming capital cities, with combined regional areas recording a quarterly increase of 1.2% in dwelling values. Western Australia and Queensland are emerging as the strongest regional performers, benefiting from diverse economic foundations.
FAQS 2
Q3. What impact are interest rate cuts having on the property market? Interest rate cuts are driving buyer confidence and increasing borrowing capacity. For each percentage point decline in the cash rate, national dwelling values are estimated to increase by 6.1%. This has led to increased refinancing activity and a surge in investment loan values.
Q4. How is foreign investment affecting the Australian property market? Foreign investment in Australian residential property has increased significantly, reaching AUD 7.49 billion in 2022-23. Chinese buyers are leading the investment, primarily targeting new, high-priced properties in metropolitan areas of Sydney, Melbourne, and Brisbane.