Groundswell Property's Market Insights
🔎 Market Myths Busted: Property Prices Hold Strong, Rentvesting Surges, and Apartments Take Center Stage – Key Insights as at 08 March 2025
Welcome to this week’s Groundswell Property Market Insights, where we cut through the media noise and deliver real, data-driven updates on Australia’s ever-changing property market.
Key highlights this week:
The Downturn That Never Was: Why the so-called market slump never actually happened.
Brisbane’s Million-Dollar Moment: Another capital city set to join Sydney in the million-dollar median club.
Apartment Boom: Demand skyrockets, but can the construction industry keep up?
Rental Squeeze Continues: Prices surge as vacancy rates tighten further.
Rentvesting Resurgence: More first-home buyers are buying where they can afford and renting where they want to live.
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.
The Downturn That Never Was
It can be hard to make sense of real estate markets when the standard of commentary in news media is so poor.
Knee-jerk responses to short-term data sets from economists, journalists and often the big-name research houses create a mass of confusing, conflicting and contradictory commentary.
Commentary around price data is the worst example of this, with too much importance put on short-term results.
Real estate is a slow-moving and long-term business, so data showing one month’s change in median house prices is meaningless.
Yet, we have commentators declaring a downturn based on one or two months’ worth of lukewarm figures.
Most know it's wrong, but they just can’t seem to resist generating outrageous headlines.
The headline on a press release from one data house at the start of March declared:
Housing Downturn Reverses in February!
Did we have a housing downturn? Apparently, two months of softer figures constitute a downturn these days and then a rise of 0.3% meant it was all over.
Quarterly figures are more meaningful and the key quarterly figures this month show:
Perth house prices are no longer growing, its boom has well and truly passed its peak
Adelaide, Darwin and Brisbane had the best growth among the capital cities and regional Queensland, South Australia and Western Australia had the best quarterly growth.
Sydney and Melbourne house prices are down about 1% over the quarter. Both had small increases in February but it’s too soon to say whether this is a serious recovery.
Brisbane Edging on $1M Median
Australia could soon have its second million-dollar city with further price growth nudging capital city prices higher.
PropTrack’s latest home price data shows that Brisbane’s median house price now sits at a record $977,000 after 9.6% growth over the past 12 months.
It is second to Sydney, which has a median house price of $1.425 million after growth of 3% in the past 12 months.
The ACT is also not far behind with its median now $956,000, despite a 2% drop in the past 12 months.
REA Group senior economist Eleanor Creagh expects Brisbane will pass the $1m median price level in the next few months. She says that already about half the suburbs in Southeast Queensland have medians above $1 million.
Propertybuyer CEO Rich Harvey says there are now 1,194 suburbs or towns nationally with medians of $1 million or more, up from 1,144 locations in September 2024.
He says Brisbane hitting a million-dollar median is “inevitable” given the strong growth since the pandemic and continued demand, especially from interstate migrants and investors.
“The key driver for Brisbane is interstate migration figures, the attractiveness of the lifestyle and the relative affordability compared to other states,” he says.
Harvey says a decade ago, $500,000 was what investors spent on average, but now it has crept up to between $750,000 and $1 million.
“We’re (Brisbane is) going to get there very soon this year. Brisbane has a growth rate of somewhere between 8% and 10% this year. I think it’s got a great future ahead of it.”
Apartments in Demand, Supply The Issue
Australia is charging headfirst into its era of apartment living, according to real estate fund managers, Qualitas.
It says that while the proportion of apartments is not as high in Australia as in other cities of the world, it is steadily growing as pent-up demand and affordability issues attract even more people to apartment living.
Qualitas managing director Andrew Schwartz says if demand for apartments continues at the same pace, it could triple the number of apartments being developed to about 75,000 a year.
He says new-build apartment prices have increased by between 15% to 20% to make them financially viable for developers, and that is not deterring buyers.
Schwartz says the biggest issue is the capacity of the Australian construction industry to build more apartments.
In the 12 months to September 2024, housing starts of new apartments, townhouses and semi-detached homes totalled 59,728. In previous years it was almost double that.
Schwarts says Sydney and Brisbane are the hardest cities to get apartment projects going as they are both experiencing labour shortages.
“We still need more players in the construction industry if we’re going to achieve the volumes and competition the industry needs,” he says.
Data from the Strategic Property Group shows that about half of all homes in Sydney are apartments.
Rental Woes
More than half of rental applicants feel pressured to offer above the asking price to secure a home.
The Real Property Report 2025 shows that finding a rental property is still a stressful experience, with many going above and beyond to try and snare somewhere to live.
The report says 57% feel they have to offer a higher rent with some paying up to $124 more per week, which equates to more than $6,000 a year.
Two-thirds of renters say they have gone to “extreme” lengths to secure rentals, with 26% applying for multiple properties at the same time, 20% paying an extra week or two of rent and 14% paying rent months in advance.
Once they secure a home, 13% of renters admit to actively lying about not having a pet so they can stay in the property.
According to SQM Research, the national vacancy rate fell to 1% in January, with the tightest markets in smaller capital cities: Brisbane (0.8%), Perth (0.4%) and Adelaide (0.5%).
It says nationally rents are up by 1.6% in January while CoreLogic says in the 12 months to February, rents rose by 4.1%.
Rentvesting on the Rise
Rentvesting is once again gaining momentum as first home buyers purchase where they can afford and rent where they actually want to live.
Westpac’s latest Home Ownership Report shows more than 54% of first-home buyers are considering rentvesting for their first purchase.
It shows investment is on the mind of many buyers with a 4% increase in Australians planning to purchase an investment property in 2025.
The report also shows that 82% of potential buyers are widening their property search and are open to purchasing in areas they hadn’t considered previously just so they can get into the market sooner.
Westpac senior economist, Matthew Hassan, says that more first-home buyers are considering rentvesting because of affordability issues and supply shortages.
“First-time buyers are at the pointy end of the affordability problems in Australia and becoming a first-time buyer is the hardest step of entering the market,” he says.
“I think rentvesting offers an alternative pathway that allows people to manage some of the financial risks that are involved with becoming a first-time buyer, while also sort of balancing lifestyle arrangements.”
The research shows that apartments and units have increased as the preferred property purchase by 7% in the past year and the preference for a townhouse has also doubled.
Key Takeaways
📌 The Downturn That Never Was: Despite dramatic media headlines, Australia’s property market has held firm. Short-term price dips in Sydney and Melbourne (-1% over the quarter) contrast with continued growth in Adelaide, Darwin, and Brisbane. Perth’s boom has plateaued, but key regional markets remain strong.
📌 Brisbane on the Verge of a $1M Median: Brisbane’s house prices have soared 9.6% in the past year to a record $977,000. With interstate migration driving demand, experts predict it will hit a $1M median in the coming months.
📌 Apartment Living Rises: Affordability pressures and supply shortages have seen a surge in demand for apartments, pushing prices up 15-20%. However, industry capacity constraints could limit supply, particularly in Sydney and Brisbane.
📌 Rental Market Stretched Thin: National vacancy rates have fallen to 1%, with Brisbane (0.8%), Perth (0.4%), and Adelaide (0.5%) among the tightest markets. Many renters are now offering above asking prices, with some paying up to $124 extra per week to secure a home.
📌 Rentvesting on the Rise: With affordability challenges mounting, more first-home buyers are choosing to buy where they can afford and rent where they want to live. Westpac reports that 54% of first-time buyers are now considering rentvesting as their entry into the market.
As always, 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: Contact Tom on 0439754475
Thanks for joining us. See you next Saturday for more insights. We look forward to supporting you in achieving your property investment goals in 2025
Tom Haigh
Director & Licensed Buyers Agent
Groundswell Property - Established 2015
tom@groundswellproperty.net
0439754475