Groundswell Property's Market Insights
Downsizing Myths, Rate-Cut Momentum, and Where $400K Still Buys a Home: Key Insights as at 03 May 2025
Welcome to this week’s edition of Groundswell Property’s Market Insights, where we cut through the media noise and deliver real, data-driven updates on Australia’s ever-changing property market.
Image source: Luisa Denu, Unsplash
As the housing debate heats up again, retirees are being blamed for Australia’s affordability crisis. But the real issue? A chronic undersupply of new homes — not Boomers staying put.
Meanwhile, investors are seeing early signs of momentum. Interest rates are falling, auctions are rebounding, and affordable markets still exist — if you know where to look.
Here’s what’s making headlines this week:
🏡 Downsizing Debate: Lazy media blames Boomers — but it’s supply, not sentiment, that’s broken
💰 Rental Yield Hotspots: High returns in remote towns... but are they worth the risk?
🏦 Banks Pre-empt RBA Cuts: Fixed and variable rates drop as May rate cut looks likely
📍 Still Buying for <$400K?: 43 suburbs remain under the $400K mark — but not for long
🔨 Auctions Rebound: Market activity picking up post-holidays, with May shaping up to be a key month
As always, our goal is to provide evidence-based insights to help you make informed property decisions—whether you're buying, selling, or simply keeping a pulse on the market. Let’s dive into the data and insights shaping the year ahead.
Lazy Policy Won’t Fix Housing Crisis
In yet another case of lazy policy thinking and really bad media behaviour, we’re now seeing older Australians being blamed for the nation’s worsening housing crisis.
The Retirement Living Council suggests more than 59,000 homes in Australia could be “freed up” if retirees weren’t fearful that selling their large family home was going to have a significant impact on their pension.
It recommends a series of changes targeted at older Australians with low to moderate wealth to “rightsize” without financial penalty.
Some commentators have seized on this, claiming that if only Boomers would move out, we could solve our housing supply crisis overnight – which is an absurd proposition.
Let’s be clear - this isn’t about stubbornness or selfishness on the part of older Australians. It’s about policy failure at every level of government for the past two decades.
Older people downsizing doesn’t increase the supply of dwellings. The shortage of homes is the big over-riding problem in the housing crisis and Australia needs to create a large number of new dwellings.
Downsizing is moving from one home to another – it doesn’t unlock new supply as our shallow media has claimed.
The average Baby Boomer is living in a home that the average first-home buyer can’t afford – so, again, a Baby Boomer downsizing does not unlock new supply for young Australians.
Financially, downsizing is often a terrible deal, the cost of selling and buying is prohibitive and can easily exceed $100,000 once stamp duty, commission and selling costs are taken into account.
Boomers aren’t just sitting in oversized houses for the sake of it — many want to stay close to family, maintain their communities, and live in homes filled with decades of memories.
Even if every single empty nester magically sold tomorrow, it wouldn’t come close to fixing the structural shortage.
Australia’s Top Rental Yields
Strong rents throughout Australia mean there are plenty of locations returning extremely high rental yields, but investors need to be wary of selecting a location based on yield alone.
New analysis by Savings.com of the top 100 Australian suburbs and towns with the highest rental yields shows there are 18 locations with house rental yields of 10% or more and 15 unit market.
While the yields may be strong, Hotspotting managing director Terry Ryder warns many of the markets are high-risk locations as they may be very remote, the economy is driven by only one industry and the chance of any significant future capital growth is unlikely.
A good example of this is the highest house rental yield in Australia is 19.4% in Lightning Ridge in New South Wales and 17.3% in Coolgardie in Western Australia.
Within the unit market there are more locations within capital city markets which are more likely to offer investors both high yields and future capital growth. There are 17 suburbs from Darwin, 12 from Perth, six from Melbourne, two from Brisbane and one each from Adelaide and Canberra in the top 100 unit markets.
The best performing capital city unit market was in Brassall in Ipswich within Greater Brisbane with a yield of 11.4%.
Banks Keep Cutting Rates
Banks are continuing to independently drop interest rates outside of Reserve Bank of Australia cuts.
Although the RBA does not meet to decide interest rates again until mid-May, many are already predicting it will cut rates again
In the lead up to the ANZAC Day long weekend, eight banks dropped their fixed rates for new customers and three dropped variable rates, according to Canstar.
That makes 18 lenders that have dropped interest rates in April. All four big banks are tipping a cash rate cut in May.
Macquarie Bank now has the lowest fixed rate for new customers at 5.19% for two and three-year fixed terms.
Canstar data insights director Sally Tindall expects more cuts before the RBA meets on May 20.
“We tend to see fixed rate changes ramp up in the lead up to an RBA meeting where there’s a high expectation of a change,” she says.
“The possibility of another cash rate cut in May is very much on the cards.”
The latest Consumer Price Index data released this week shows headline inflation remains steady at an annual rate of 2.4% while the RBA’s preferred measure of trimmed median inflation is now 2.9% bringing it within the RBA’s target band for the first time in three years.
Many economists believe this drop means an interest rate cut is certain when the RBA Board meets later in May.
Canstar data insights director Sally Tindall expects more cuts before the RBA meets on May 20.
With inflation slowly easing and economic growth subdued, lenders appear to be jostling for market share early.
NT Tops Bargain Suburbs List
There are still some bargains to be found in the Australian property market with new analysis showing there are 43 suburbs where you can buy a house or unit for less than $400,000.
The Northern Territory features the most prominently in the PropTrack affordable market list, with 22 suburbs with medians of $400,000 or less.
Both Berrimah and Lee Point had median house prices below $400,000, while 20 unit markets were below that threshold including the Darwin CBD.
Hotspotting’s Autumn 2025 Price Predictor Index shows Darwin has become one of Australia’s leading markets, with sales activity soaring and indications it will perform strongly throughout 2025.
Of the larger capital city markets, Melbourne tops the list with eight suburbs, all unit markets, with low medians, including Albion, about 37km from the CBD, with a median unit price of just $281,000.
In Adelaide, there are seven suburbs on the list topped by Elizabeth Vale (about 30km from the Adelaide CBD) with a median unit price of $315,000.
Sydney has three metropolitan markets under $400,000 - Normanhurst, Vineyard and Carramar, while the ACT has two – Lyons and Hawker.
Hobart has one suburb under $400,000 – Gagebrook.
REA Group economist Anne Flaherty says the number of suburbs below $400,000 has decreased dramatically in the past five to ten years.
“Access to metro (areas) increases demand, and with further price rises projected, it’s completely feasible that in two years’ time, we won’t have any suburbs left on that list,” she says.
Auction Trend Continues
With the Easter holidays and ANZAC Day long weekend, now done and dusted Australia’s auction market is expected to pick up pace again.
Although with another long weekend looming in some states for Labour Day next week and the Federal Election on Saturday, it may take a little longer to return to normal levels.
As is to be expected, the auction clearance rate last week was low, just 64.2% - the lowest since mid-December 2025 according to Cotality (formerly CoreLogic).
Cotality head of research Tim Lawless says anticipation of another interest rate cut in May could improve auction conditions.
There were 1080 auctions were held last week (up from the 644 properties auctions over the Easter long weekend) which is well down on the same time last year when 1964 homes were offered under the hammer.
Melbourne was the busiest auction market last week, achieving a clearance rate of 67.6%, followed by Sydney 66.2%, Adelaide, 61.1% and Brisbane 47.1%.
Within the broader markets, Melbourne’s outer east was the most successful auction market over the weekend with its clearance rate of 86.7% while the Gold Coast had the lowest clearance rate of 37.5%.
Key Takeaways
Australia’s housing conversation hit a new low this week, with older Australians copping the blame for the housing crisis. But let’s be clear: downsizing doesn’t add new housing supply — and shifting blame does nothing to solve a structural issue two decades in the making.
Meanwhile, investors are getting ready to move. Rents remain high, yields are attractive in pockets, and fixed rates are already falling ahead of the RBA’s next meeting.
Despite affordability pressures, there are still genuine opportunities — especially in Darwin, Adelaide, and parts of Melbourne — where price points under $400,000 are becoming increasingly rare.
Auction activity is also trending upward, albeit slowly, as the long weekends clear and buyers look to get in ahead of the market moving.
Key Takeaways:
🔍 Boomers aren’t the barrier — policy inaction and housing undersupply are
💡 High yields ≠ low risk — don’t let numbers blind you to long-term fundamentals
📉 Lenders are already cutting — interest rate momentum is building
🏘️ Affordable markets remain — but they’re disappearing fast
🔨 Auctions warming up — May could bring a stronger return to market activity
We’ll continue tracking the data and delivering the insights that matter most.
Success in property comes down to having the right information, the right team, and the right strategy. If you want to make your next move with the confidence and preparedness needed to get the best result, get in touch via 0439754475
Keep an eye out next Saturday for more insights.
Tom Haigh
Director & Licensed Buyers Agent
Groundswell Property - Established 2015
tom@groundswellproperty.net
0439754475