10 insights into the investment property market

In recent news, rents rise though the rate of growth continues to slow; house price growth momentum temporarily loses steam; vacancies down more than 15,000 homes; listings, building approvals and new home sales on the rise; investor loans tumble for the first time in two years; NSW introduces a rental taskforce; RBA cuts interest rates; and foreign investors banned from buying established homes.

Each month we pull together 10 insights impacting the investment property market. Read on for this month’s instalment… 

1. Rents on the rise despite growth rate slowing. According to SQM Research, capital city asking rents rose 1.6% in February. House rents were up 1.4% to $855 p/w while unit rents rose 1.8% to $633 p/w. The national median rent rose by 6.9% over 2024 – marking the slowest growth since late 2021, according to the REA Group Rental Report. However, with rental growth slowing, CoreLogic expects the annual change in rents to fall to below average levels in the first half of 2025.

2. House price growth continues to slow, but not for long. National home prices fell 0.08% in January to a median value of $796,000, but remained 3.82% higher year on year, according to PropTrack. Data from MyHousingMarket showed the national median house price fell 0.8% in February to $1,151,730, while unit prices rose 0.2% to $658,528. According to KPMG, the national residential property market is forecast to see a 3.3% increase in house prices over the next 12 months. Ray White Group expects the current pricing downturn to be short-lived, as does API.

3. Vacancies dive. Australia's residential dwelling vacancy rate declined to 1.0% in January (31,822 vacancies), down from 1.6% recorded in December (47,336), according to SQM Research. According to Statista, Melbourne (2.2%) had the highest vacancy rate across the capitals in December 2024, closely followed by Syndey and Canberra (2.1%).

4. Buying and selling buzz. According to SQM Research, total nationwide residential property listings increased by 4.5% over January, reaching 243,642 listed properties. National new listing volumes were 7.9% higher in 2024 than the previous year and at the highest level since 2021, according to REA’s Listings Report. Data from LocalAgentFinder revealed listing activity is projected to be 31% higher in NSW and Victoria compared to Queensland and WA in 2025. LJ Hooker Group predicted an above-average number of listings will keep Australian property sales strong in 2025.

5. Property investment loans on the wane. Data from the ABS revealed loans to investors fell 4.5% in the December 2024 quarter – the first fall in almost two years. The total value of new investment loans was $32.4 billion, a fall of 2.9% (-$1.0 billion). The average loan size rose by $25,065 to $674,316. Despite the decline, data from money.com.au showed investor loans were the fastest-growing segment of the market – recording 22% growth in 2024, compared to a 6% increase for owner-occupier loans.

6. Heads up for NSW landlords. NSW Fair Trading launched its Rental Taskforce, targeting solicited rent bidding, stopping no grounds evictions, and ensuring improved responses to repairs and maintenance. From 23 March 2025, rental properties in NSW must comply with updated water efficiency standards if landlords want to charge tenants for water usage.

7. Social media rental scam warning. REIV warned scammers are copying legitimate rental listings and modifying them with altered rental prices, tenancy conditions, and false contact information to deceive potential tenants.

8. RBA cuts rate for first time since 2020. At its Board meeting on 18 February, the RBA cut the official cash rate by 0.25% to 4.10%. The announcement marked the first rate cut since November 2020. Property Buzz reported more than 50 lenders would pass on the full 0.25% rate cut. CoreLogic noted the average mortgage rate for owner-occupier loans is set to ease from around 6.32% to 6.07%. SQM Research’s property price forecasts improved with the announcement of the rate cut. CoreLogic identified the housing markets that would receive the largest boost from the rate cut, while realestate.com.au identified the winners and losers.

9. Government beat. NSW passed new strata laws designed to bolster owners’ protections while increasing oversight and regulation of owners’ corporations and strata agents. The state is also reviewing off-the-plan laws to better protect buyers.  A new “townhouse code” is set to be introduced in Victoria with a streamlined approvals process for medium-density housing. The state also unveiled its final housing targets for every local area, aiming to deliver 2.24 million homes by 2051, while NSW’s Low and Mid-Rise housing policy is set to deliver 112,000 new homes over the next five years.

10. Snippets. Foreign investment in Australian residential property has declined, according to figures from the FIRB. It was also announced that foreign investors will be banned from buying established homes until 31 March 2027. API reported that compared to the rest of world, Australian property is relatively affordable. First-home buyers can enter the property market nearly two years sooner by purchasing a unit instead of a house, according to Domain’s First Home Buyer Report. A survey by Compare the Market revealed that 39% of Australians have buyer’s remorse. Property Update noted Australia’s population is rising by 500,000 per year, impacting demand for housing. 

*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are here, contact 1800 661 662 if you have any questions.