10 insights into the investment property market

In recent news, rental affordability improves marginally; rental growth eases despite vacancy rate decline; for the first time in a year, housing affordability improves; home prices rise to a new record high; the number of million-dollar suburbs boom; apartments outperform houses; listings rise as asking prices increase; authorities target rent bidding; and investors look interstate.

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

1. Rental affordability improves despite rents rising over the quarter. REIA’s Housing Affordability Report showed March was the second consecutive quarter of modest improvements in affordability with the proportion of income required to meet median rent decreasing 0.2% to 24.5%. NSW was the least affordable state, requiring 27.6% of income. The national median rent for 3-bedroom houses increased by 0.6% over the March 2025 quarter, to $628 p/w, while national median rent for 2-bedroom other dwellings increased 3.5%, to $648 p/w, according to REIA’s Real Estate Market Facts. Realestate.com.au identified the 20 suburbs where rents will keep rising over the next 12 months.

2. Rental growth slows as vacancy rates hold steady. National rents fell 0.1% in June to $649 per week, with house rents nudging up to $722 and unit rents dropping to $565, according to SQM Research. Vacancy rates dipped slightly to 1.2% in May, with 37,879 properties available. Melbourne had the highest rate at 1.7%, followed by Sydney and Canberra (1.5%). Meanwhile, ABS data shows annual rent inflation eased to 4.5% in May — the slowest pace since December 2022 — signalling more stable conditions in the rental market.

3. Housing affordability improves for the first time in a year. For the first time in a year, housing affordability improved, with the median family income needed to cover loan repayments dropping to 48% in March 2025, per REIA. All states except the NT saw gains. Despite this, five Australian capitals remain among the least affordable globally, including Sydney (2nd) and Melbourne (9th), according to the 2025 Demographia International Housing Affordability report. Mortgage arrears have risen but stay under 2% of the loan book, per Cotality. Affordable housing options exist in select inner-city suburbs, with 15 capital city areas having median house prices below $500,000, as noted by realestate.com.au and SPI.

4. Home price growth continues. Home prices continue to rise, with national dwelling values up 0.39% in May to a record $809,000—a 4.12% increase year-on-year and 50.1% since March 2020, according to PropTrack. Capital cities led gains, rising 0.45%. Cotality’s Home Value Index showed a 0.5% increase in May, pushing the national index 1.7% higher for the year to date. The national median house price was $1,184,459 and units $677,003 in May (My Housing Market). Domain forecasts 6% growth for houses and 5% for units by FY26, led by Sydney and Melbourne, with record highs expected in Sydney, Brisbane, and Adelaide. Hotspotting’s Winter 2025 Price Predictor highlights suburbs where rising sales signal future price growth.

5. Million-dollar medians abound. Figures from the ABS showed national dwelling prices increased by 0.7% (or $6,900) over the March 2025 quarter, reaching a mean price of $1,002,500. Ray White Group’s data analysis revealed Australia has 923 suburbs with a geometric mean house price of at least $1 million – and this will exceed 1000 within the next 12 months. Perth will contribute 22 suburbs of the 78 expected to join the club.

6. Apartments outpace houses in price and rent growth. REIA’s Real Estate Market Facts showed two-bedroom dwellings rose 1.1% in Q1 2025 to a median $702,315, supported by stronger growth across more regions. Weekly rents for two-bedroom units increased 3.5% to $648, compared to 0.6% for three-bedroom houses ($628 p/w). Research by Nuestar and Hotspotting found 62.9% of apartment markets matched or exceeded house price growth over 12 months to May. Apartments with balconies can command up to $390,000 more.

7. Buying and selling. National house asking prices rose 1.4% in June to a median of $1,003,186, while unit prices held steady at $583,612, according to SQM Research. New listings increased 7.6% in May, with total residential listings up 5.9% to 256,628 properties, as reported by REA Group and SQM Research. Resale profits remain strong, with 94.9% of houses and 90.1% of units selling at a profit in the first quarter of 2025, showing median gains of $355,000 for houses and $205,000 for units, according to Cotality. Buyer sentiment is high on the east coast, positioning Sydney, Melbourne, and Brisbane for growth in FY26, according to REBAA.

8. Need-to-know. Rental Dispute Resolution Victoria launched on 23 June, providing a new resource for resolving tenancy issues. In NSW, a landlord was fined $8,500 for placing an ‘unnecessary financial burden’ on a tenant by demanding three months’ rent upfront. Victoria is taking legal action against five agencies over rent bidding practices, while WA has intensified inspections to combat rent bidding statewide. Additionally, new property disclosure laws will come into effect in Queensland from 1 August 2025, enhancing transparency for buyers.

9. On the radar for investors: Frank Knight indicated Sydney and Brisbane were leading the way as prime investment targets for 2025. Momentum Wealth’s Property Sentiment Report 2025 showed that 67.1% of investors were seeking property in other states. Melbourne emerged as Australia’s most affordable capital for investors, according to PRD. Hotspotting revealed the top 10 positive cashflow hotspots. Rentvesting has become an increasingly viable option for younger buyers, according to Ray White Group. SPI explored what is coming for investors. Property Update asked if it is crunch time for Airbnb, while unions push for an Airbnb levy to fund essential worker housing.

10. Snippets. Melbourne (4th), Sydney (6th) and Adelaide (9th) made the top 10 most liveable cities list. Wellness real estate has doubled in just five years, outpacing global construction 3-to-1. The sector is now valued at US$548 billion and is set to hit US$1 trillion by 2029. At 214sqm, Australia has the world’s largest houses. Listings underreport energy efficiency features despite one-third of buyers willing to pay a premium for more efficient properties. Half of Australians want household batteries with solar systems. It is five times harder to buy a home now than in 1980. Some 45% of first-time buyers regret their purchase. 

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