Australia’s housing market has already emerged from a brief downturn, just as the Reserve Bank of Australia (RBA) announced the anticipated rate cut in February.
Home price growth could remain slow in 2025, however, given challenging affordability and weak migration weighing on demand.
A three-month housing downturn came to an end in February, with CoreLogic’s national Home Value Index (HVI) posting a 0.3 percent rise for the month.
CoreLogic head of research Tim Lawless says anticipation of action from the RBA helped bring the housing market downturn to an early end.
“Expectations of lower interest rates, which solidified in February, look to be flowing through to improved buyer sentiment,” he said.
“Along with the modest rise in values, we have seen an improvement in auction clearance rates, which have returned to long-run average levels across the major auction markets.”
While the consensus is there will be a string of rate cuts in 2025 providing succour to the property market, leading analysts expect only slow growth this year, given the poor affordability of Australian housing.
Westpac’s Matthew Hassan foresees only three percent growth in home prices this year, with the positive impact of rate cuts from Australia’s monetary authority offset by affordability issues and limited supply.
The bank’s Housing Pulse report expects the RBA to reduce its target cut by 75 basis points in total this year, following its 25 basis point reduction in February.
Given recent historical performance, however, Hassan says the impact of these rate cuts on housing prices remains uncertain.
“Markets are coming off a cycle that was surprisingly disconnected from interest rates,” Hassan said.
Demand could also ease on the back of slower population growth. The Centre for Population expects net overseas migration to post further declines, as a recent wave of visa approvals peaks, and arrivals thin out while departures see increases.
Any reduction in migration will result in a short-term decline in demand for rental accommodation, as well as lower demand from home buyers over an extended timeframe.
On the other hand, a major tailwind for housing prices could be disappointing levels of new builds, with Australia already lagging well behind schedule on the National Housing Accord’s 2029 target of 1.2 million new homes.
Only 44,884 new homes were built in Australia in the September quarter - the first following the start of the Accord on 1 July. The Property Council of Australia noted the property sector will need to build new homes at a clip of 60,000 units each quarter in order to satisfy the Accord’s ambitious target.
ASIC has signalled a marked intensification of its focus on the private credit market, particularly in relation to retail investors. In its February 2025 discussion paper Australia’s Evolving Capital Markets, the corporate regulator underscored concerns around ‘opacity, conflicts, valuation uncertainty, illiquidity and leverage’ in private credit funds, warning that while the sector is not yet systemically important, it remains untested by prior crises and failures ‘are on the horizon’.
CrowdProperty COO, Tony Zulli said that with significant growth of private markets in recent years, ASIC estimates the private markets sector globally is now worth over US$3 trillion.
"Although the sector is currently subject to high standards of governance and transparency, the regulator is now consulting with the industry to ensure the current high standards are retained and improved where appropriate," Zulli said.
In its discussion paper, ASIC states: ‘Private markets may be becoming more democratised and accessible to a wider range of investors. However, they also carry different risks, including those related to illiquidity, leverage, conflicts and valuation uncertainty. The opacity of private markets poses a challenge for informed investor decision-making and raises questions regarding appropriate regulatory oversight of these risks.’
"Opacity, or transparency, is the heart of the issue," Zulli said.
"At CrowdProperty, we welcome the focus on standards and transparency as this has been core to our values since inception in the UK in 2013 and now in Australia.
"Investors are seeking yield and diversification in private debt, and robust oversight can support more informed participation in the sector. What’s key is maintaining the flow of capital to high-quality, well-managed projects.”
While ASIC sharpens its focus on the risks in private credit markets, conditions on the ground could prove favourable for SME property developers, at least in the short term. CrowdProperty property director, Brian Cullen said the sheer volume of capital currently looking for deployment is reshaping the borrowing landscape.
“We currently see large amounts of capital on the sidelines in the private credit market,” Cullen said.
“This is creating a very competitive borrowing marketplace and will place downward pressure on interest rates to both investors and developers.”
For developers, this surge of available capital, combined with slower-than-expected project commencements across the sector, means lenders are jostling for deals. Cullen notes that this dynamic will persist until market forces rebalance.
“Until we move through that cycle and demand meets supply, we expect high levels of competition between lenders in the non-bank space, which will only benefit borrowers.”
While good news for developers, this competition also presents opportunities and challenges for investors seeking yield in private debt. As the market adjusts, balancing competitive returns with prudent risk management will be key for non-bank lenders and their investors.
Keenly aware of the lag in new home builds, local governments in NSW and Victoria are making haste to expedite higher-density developments.
Rob Flux, developer and educator at the Property Developer Network, said two major moves in these states will create strong opportunities for smaller developers.
The first is the release of new compliance codes in NSW at the end of February, which give extra density and additional rights to anyone wanting to do fast-track approvals for duplexes, townhouses and low to medium-rise developments located within 800 metres of major transport and shopping centres,
“They’ve identified 173 different growth areas where there will be extra density, and local government can’t refuse,” Flux said.
Flux also points to Victorian Premier Jacinta Allen’s announcement that she wants to transform the state into the “townhouse capital of Australia”.
“They are going to be releasing a fast-track approval process for duplexes and townhouses in Victoria - a brand new opportunity that’s never been seen before.”
“These are very big moves from both these states to help solve the Australian housing crisis.”
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Opinions or views expressed represent the thoughts of individuals and not those of CrowdProperty or Cache.
Australian housing prices held steady in January, despite a slight drop in dwelling values for capital cities.
Dwelling values have potential to rise as improving buyer confidence — driven by the prospect of a rate-cutting cycle from the Reserve Bank of Australia (RBA) — combines with ongoing weakness in new home approvals.
CoreLogic’s national Home Value Index (HVI) held steady in January, posting a mere 0.03 percent decline. In the capital cities the mood of the market proved more dour, with home prices falling 0.2 percent, compared to a rise of 0.4 percent for regional Australia.
Three out of eight capital cities in Australia saw home price declines in January, led by Melbourne (0.6 percent), followed by the ACT (0.5 percent) and then Sydney (0.4 percent).
The current cycle of home price growth is fast shedding momentum, with annual growth in the HVI halving to 4.3 percent for the 12 months ending in January 2025, compared to 9.7 percent for February 2024.
The RBA implemented a long-awaited reduction to the cash rate at its latest monetary policy meeting held on 18 February, potentially ushering in a new rate cutting cycle with a 25 basis point cut.
CrowdProperty Australia CEO David Ingram said the RBA’s decision to lower interest rates signals a critical shift for SME developers, creating both immediate opportunities and longer-term strategic considerations.
“In the short term, lower borrowing costs will provide some relief for SME developers, making it easier to secure finance and improving project feasibility,” Ingram said.
“For those looking to acquire sites or progress stalled projects, this creates a window of opportunity before the market fully reacts.”
However, Ingram cautioned that a single rate cut is unlikely to drive an immediate surge in demand or affordability, with the broader impact dependent on whether this marks the start of a sustained easing cycle.
“If further cuts follow in the coming months, we’ll see renewed buyer confidence and stronger pre-sales activity, both of which are critical for unlocking new development opportunities,” he said.
“However, other challenges remain — construction costs are still elevated, and labour shortages continue to constrain delivery timelines.
“SME developers who move strategically — by identifying viable sites, securing finance early, and structuring projects to align with shifting market conditions — will be best positioned to capitalise on this changing landscape.”
Rob Flux, developer and educator from the Property Development Network, said market sentiment was beginning to shift, factoring in the anticipated cut.
Flux said that despite the change in sentiment, property prices won’t be significantly affected until later in the year, assuming the RBA rounds off a series of rate cuts.
The market is expected to witness an uptick in demand on the back of reduced borrowing costs.
“While market inquiries will pick up, it will still take some time for affordability to kick in,” he said. “There need to be three or four more cuts before affordability starts to become a factor.
“The opportunity that sits before us is to seize properties now or in the coming months before a wave of people start to enter the market.”
Despite the nationwide push to increase Australia’s home supply, new home approvals continue to fall short of the federal government’s National Housing Accord target.
According to Karen Dellow, senior data analyst at PropTrack, new home approvals need to average 20,000 per month if Australia wants to achieve the goal of creating 1.2 million new homes by mid-2029.
The average has been just 14,800 per month since the start of the current financial year. While approvals have seen an upward monthly trend since March, at an average of just two percent per month, this is far from sufficient to meet the target volume.
If this situation persists, Australian home prices is expected to receive upward pressure over the long-term from persistent supply constraints.
David Ingram said persistently low dwelling approvals remain a major hurdle for SME developers, despite a modest upward trend in recent months.
“Karen Dellow’s analysis highlights the stark reality that Australia is still well short of the approvals needed to meet the federal government’s housing targets,” he said.
Ingram noted that while the overall volume of approvals remains insufficient, the composition of new projects is also shifting in ways that affect SME developers.
“We’re seeing fewer affordable, entry-level homes being approved, largely due to rising construction costs and the pressure on developers to maximise returns. This trend risks further exacerbating housing affordability challenges,” he said.
Despite these headwinds, Ingram believes there is opportunity for agile SME developers who can navigate the current market conditions.
“As larger developers focus on high-end projects, SMEs who can efficiently deliver well-located, mid-market — or ‘missing middle’ — housing will be well positioned to meet demand,” he said. “The key is securing finance and sites early while the market remains in a constrained approval cycle.”
Scott French, senior lecturer in economics, UNSW Sydney, expects the tariffs to reduce steel and aluminium costs by putting a dent in US demand.
“Because the tariffs will make steel and aluminium more expensive to US manufacturers, they will seek to reduce their use of them,” French wrote. “This means global demand for the metals will decline.”
However, the broader impact remains uncertain. Global trade policies can have unintended consequences, and while cheaper materials may be one outcome, there are several factors that could push costs in the opposite direction.
Ingram said that while there is a possibility that Trump’s tariffs could lead to lower steel and aluminium prices, trade policies often have complex ripple effects.
“The outcome will depend on global supply chain responses, currency movements, and how Australian suppliers adjust to shifting demand,” he said.
“SME developers should keep a close eye on how these factors evolve, as they could either create cost-saving opportunities or introduce new inflationary pressures on materials."
Ingram believes there might be short-term benefits, with talk of US tariffs driving lower steel costs and aluminium prices as China focuses on other markets.
“Right now, we do have clients looking to take advantage of the situation by shopping in China for materials to lower their cost of construction back here in NSW.”
“However in the long term increasing global trade protectionism is not good for anyone, and will drive inflation,” he said.
CrowdProperty provides fast, simple and transparent property project finance for property professionals, learn more.
Opinions or views expressed represent the thoughts of individuals and not those of CrowdProperty or Cache.
The Australian housing market has slipped back into a downturn, as high interest rates and low affordability hinder prospective buyers from home ownership.
The slump is expected to be short-lived, with leading economists at ANZ, Westpac and CoreLogic continuing to forecast full-year gains in home prices.
In December, CoreLogic’s national Home Value Index (HVI) edged back into negative territory, with a 0.1 percent decline that followed swiftly on the heels of a stationary print for November.
This new downturn marks the end of a 21-month growth cycle in home prices, during which nationwide values surged by 14.3 percent before losing momentum in June 2024.
High dwelling prices and interest rates have put heavy pressure on housing demand, with the Reserve Bank of Australia’s (RBA) reluctance to ease monetary policy further compounding housing affordability.
CoreLogic highlights a huge gap between the national median dwelling value of $815,000 and what analysts consider to be an affordable purchase price of $513,000 for a median-income household in Australia.
The Australian Bureau of Statistics reported that headline inflation rose by 0.2% in the December quarter, bringing the annual rate to 2.4%. This deceleration in inflation has led to increased speculation about potential interest rate cuts by the Reserve Bank of Australia (RBA).
In response to the latest inflation data, three of Australia's major banks — Commonwealth Bank, ANZ, and Westpac — now predict that the RBA will cut interest rates in February. NAB remains more cautious, anticipating that rates will remain unchanged in the near term.
Economists at Australian financial institutions expect the downturn to be brief, and for housing prices to bounce back before the end of 2025 to post a full-year increase.
Both AMP and WestPac expect Australian dwelling values to end the year three percent higher, despite a downturn in the first half of 2025.
Shane Oliver, AMP chief economist, said rate cuts by the RBA will give a boost to the market in the second half.
"After rising 4.9 percent in 2024, we expect average property prices to rise around three percent this year, with weak conditions initially followed by stronger conditions in the second half as lower interest rates eventually provide a boost to prices," he said.
Matthew Hassan, Westpac senior economist, made a similar forecast and expects home prices to return to robust growth by 2026.
"After a mixed first half we expect a second-half gain to see dwelling prices up three percent in 2025 with growth lifting to seven percent in 2026 — firmer but still constrained by affordability in most markets,” he said.
Eliza Owen, CoreLogic head of research, said Australia will struggle to see a warming up of the housing market before further price declines or a rate cut from the RBA.
“It’s hard to see any material growth returning to housing values, at least at a macro level, until housing affordability and loan serviceability improves more substantially,” Owen said.
She too expects the cyclical downswing to be short and shallow, given the underlying fundamentals of the Australian property market.
Brian Cullen, associate director, property at CrowdProperty, emphasised that developers should use this period of downturn to reassess their strategies and focus on opportunities in their specific areas of expertise.
"The market is showing signs of a rebound later this year, which means now is potentially the perfect time for developers to review their patch. Understanding local trends and buyer preferences will help ensure projects are well-positioned to meet demand when the market picks up," Cullen said.
"Successful developers don’t just follow the broader market, they analyse micro-markets to identify underserved segments and capitalise on emerging trends. Whether it's targeting infill housing opportunities, optimising designs for affordability, or engaging with local councils to streamline approvals, a well-thought-out approach tailored to your area will pay dividends as conditions improve."
Cullen also noted that timing will be critical.
"It’s not just about securing 'bargains' during the downturn, it’s about strategically aligning your development timeline with the market upswing. Those who do their homework and act decisively in their local markets will be well-positioned to maximise returns when buyer confidence returns."
Rob Flux, educator and developer at the Property Developer Network, said the downturn presents strong opportunities for developers to find bargains as prices trend downwards in the first quarter.
Given a likely rebound in the market before the end of the year, they can also time the completion of their developments for when home prices are on the ascent again.
“They should take advantage of the current market slump to pick up properties at a relative discount, knowing there will be a turnaround once affordability returns and people can get back into the market,” Flux said.
“This is the time to be buying low, doing your development and potentially selling into an upward market by the time you get to the end of your project.”
CrowdProperty provides fast, simple and transparent property project finance for property professionals, learn more.
Opinions or views expressed represent the thoughts of individuals and not those of CrowdProperty or Cache.
