As we move into the 2025–26 financial year, Australia’s property market is entering a period of recalibration. Following years of volatility driven by interest rate shifts, supply chain disruptions, and demographic movement, the coming year is expected to be marked by relative stability — but not without its own challenges and emerging trends.
The Reserve Bank of Australia has signalled a more stable cash rate environment, with inflation showing signs of settling into the target range. While further rate cuts are possible later in the financial year, the current outlook suggests minimal movement in the short term. This is providing much-needed confidence to buyers and investors after several turbulent years.
Stable interest rates are likely to improve borrowing capacity and increase buyer activity, particularly in key metropolitan areas and growth corridors. However, cost-of-living pressures and broader economic uncertainty may continue to dampen consumer sentiment in the first half of the year.
A critical issue shaping the market in FY25/26 is Australia’s deepening housing supply shortage. Despite ambitious government targets for new home builds, completions are falling short due to rising construction costs, labour shortages, and lengthy approval processes.
This imbalance between supply and demand is keeping upward pressure on prices, especially in the rental market. Vacancy rates remain at historic lows across capital cities, driving rents higher and pushing policymakers to consider further reforms to support tenants and incentivise new supply.
Expect continued interest in build-to-rent (BTR), medium-density housing, and innovative housing models aimed at addressing affordability while delivering scalable supply.
Investor interest is expected to strengthen throughout FY25/26, particularly as rental yields remain high and the market outlook stabilises. With net overseas migration remaining strong, especially in major cities like Melbourne, Sydney, and Brisbane, demand for rental accommodation will persist — providing both challenges and opportunities for investors and developers.
The return of international students, skilled migrants, and working holiday makers will place additional pressure on urban rental markets and may also influence preferences toward more flexible, professionally managed housing solutions.
While the regional boom has softened post-COVID, many non-metropolitan areas continue to experience moderate growth, particularly those with strong infrastructure, connectivity, and lifestyle appeal. Areas within commuting distance to major cities, or with high liveability and job creation potential, remain attractive for both homeowners and investors.
FY25/26 will also see a continued shift toward smarter, greener property. Buyers and tenants alike are increasingly prioritising sustainability, energy efficiency, and tech-enabled living. ESG (Environmental, Social, and Governance) considerations are becoming more important for developers, investors, and institutional landlords — particularly as regulation tightens and expectations rise.
The Australian property market in FY25/26 is best described as cautiously optimistic. A more stable interest rate environment, strong population growth, and structural undersupply will support demand — but affordability, construction bottlenecks, and shifting policy will require agile responses from all stakeholders.
For property professionals, the focus will be on unlocking supply, enhancing resilience, and responding to the evolving needs of buyers and renters alike.
