The Australian property market comprises the trade of land and its permanent fixtures located within

Australia Australia, officially the Commonwealth of Australia, is a country comprising mainland Australia, the mainland of the Australia (continent), Australian continent, the island of Tasmania and list of islands of Australia, numerous smaller isl ...

. The average Australian property price grew 0.5% per year from 1890 to 1990 after inflation,Stapledon, Nigel. A History of Housing Prices in Australia 1780-2030. School of Economics Discussion Paper: 2010/18. Sydney, Australia: The University of New South Wales Australian School of Business. . Retrieved 1 May 2011 however rose from 1990 to 2017 at a faster rate. House prices in Australia receive considerable attention from the media and the

Reserve Bank A central bank, reserve bank, national bank, or monetary authority is an institution that manages the monetary policy of a country or monetary union. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the mone ...

and some commentators have argued that there is an

Australian property bubble The Australian property bubble is the economic theory that the Australian property market has become or is becoming significantly overpriced and due for a significant downturn (also called a Market correction, correction or Economic collapse, co ...

. The residential housing market has seen drastic changes in prices in the past few decades. The property prices are soaring in major cities like Sydney, Melbourne, Adelaide, Perth, Brisbane and Hobart. The median house price in Sydney peaked at $780,000 in 2016. However, with stricter credit policy and reduced interest from foreign investors in residential property, prices have started falling in all the major cities. When compared with the soaring prices of 2017, the housing prices fell by 11.1% in Sydney and 7.2% in Melbourne in 2018. In 2022 the residential rental market has seen a significant increase in rents, which has been described as a 'rental crisis'.

Description

Composition

In 2011 there were 8.6m households with an average household size of 2.6 persons per household. Freestanding houses have historically comprised most building approvals, but recent data shows a trend towards higher density housing such as townhouses and units. Turnover rates vary across market cycles, but typically average 6% per year. Since 1999-2000 the proportion of households renting from state/territory housing authorities has declined from 6% to 3% while the proportion renting privately increased from 20% to 26% in 2019-20.

Regional variations

The Australian property market is non-uniform, with high variation observed across the major cities and regional areas.

Sydney

Sydney Sydney is the capital city of the States and territories of Australia, state of New South Wales and the List of cities in Australia by population, most populous city in Australia. Located on Australia's east coast, the metropolis surrounds Syd ...

, as of March 2010, the Property Market's vacancy rate reached 0.53% signalling that the market is recovering, as these rates had reached 2% in August 2009. As of July 2015, the Property Market in Sydney has surged in the first Q of 2015, up 3.1%. Sydney's eastern and northern suburbs typically attract the highest prices, reflecting their desirability and premium location. The annual capital growth for houses and units in Sydney is 4.2% and 3.8% respectively.

Key issues

Affordability

In the late 2000s, housing prices in

, relative to average incomes, were among the highest in the world. As at 2011, house prices were on average six times average household income, compared to four times in 1990. This prompted speculation that the country was experiencing a

real estate bubble A real-estate bubble or property bubble (or housing bubble for Residential area, residential markets) is a type of economic bubble that occurs periodically in local or global real estate markets, and it typically follows a land boom or reduced in ...

, like many other countries. Foreign investment has also been identified as a key driver of affordability issues, with recent years seeing particularly high capital inflows from Chinese investors. A 2025 industry analysis estimated that Australia needs to build an average of 225,400 new dwellings annually to 2034 in order to meet both new and historic housing demand.

Immigration to Australia

A number of economists, such as

Macquarie Bank Macquarie Group Limited (), more commonly known as Macquarie Bank, is an Australian multinational investment banking and financial services group headquartered in Sydney and listed on the ASX (). Macquarie's investment banking division is Au ...

analyst Rory Robertson, assert that high immigration and the propensity of new arrivals to cluster in the capital cities is exacerbating the nation's

housing affordability Housing refers to a property containing one or more shelter as a living space. Housing spaces are inhabited either by individuals or a collective group of people. Housing is also referred to as a human need and human right, playing a crit ...

problem.Klan, A. (17 March 2007
Locked out
According to Robertson, Federal Government policies that fuel demand for housing, such as the currently high levels of immigration, as well as capital gains tax discounts and subsidies to boost fertility, have had a greater impact on housing affordability than land release on urban fringes.Wade, M. (9 September 2006

/ref> The Productivity Commission Inquiry Report No. 28 First Home Ownership (2004) also stated, in relation to housing, "that Growth in immigration since the mid-1990s has been an important contributor to underlying demand, particularly in Sydney and Melbourne." This has been exacerbated by Australian lenders relaxing credit guidelines for temporary residents, allowing them to buy a home with a 10 percent deposit. The RBA in its submission to the same PC Report also stated "rapid growth in overseas visitors such as students may have boosted demand for rental housing". However, in question in the report was the statistical coverage of resident population. The "ABS population growth figures omit certain household formation groups – namely, overseas students and business migrants who do not continuously stay for 12 months in Australia." This statistical omission lead to the admission: "The Commission recognises that the ABS resident population estimates have limitations when used for assessing housing demand. Given the significant influx of foreigners coming to work or study in Australia in recent years, it seems highly likely that short-stay visitor movements may have added to the demand for housing. However, the Commissions are unaware of any research that quantifies the effects." Some individuals and interest groups have also argued that immigration causes overburdened infrastructure.Claus, E (2005
Submission to the Productivity Commission on Population and Migration
(submission 12 to the Productivity Commission's position paper on Economic Impacts of Migration and Population Growth). Nilsson (2005)
Negative Economic Impacts of Immigration and Population Growth
(submission 9 to the Productivity Commission's position paper on Economic Impacts of Migration and Population Growth).

Foreign investment in residential property

In December 2008, the federal government introduced legislation relaxing rules for foreign buyers of Australian property. According to FIRB (Foreign Investment Review Board) data released in August 2009, foreign investment in Australian real estate had increased by more than 30% year to date. One agent said that "overseas investors buy them to land bank, not to rent them out. The houses just sit vacant because they are after capital growth."

Negative gearing

Australian property investors often apply the practice of negative gearing. This occurs when the investor borrows money to fund the purchase of the property, and the income generated by the property is less than the cost of owning and managing the property including interest. The investor is expecting that capital gains will compensate for the shortfall. Negative gearing receives considerable media and political attention due to the perceived distortion it creates on residential property prices. In anticipation of Labor being elected in the 2019 federal election, the banks issued less interest only loans which are used by many investors for negative gearing. The International Monetary Fund (IMF) has highlighted that tax concessions, such as negative gearing and the capital gains tax discount, are distorting Australia's housing market by driving up prices and contributing to declining home ownership rates. To improve housing affordability, it is recommended to restrict negative gearing to newly built homes, eliminate the capital gains tax discount, and implement macroprudential policies to limit credit access for residential investment properties.

Residential rental market

In 2022 the Australian residential rental market saw an annual increase in rents of 12%, the strongest increase in 14 years. Across Australia the vacancy rate was 1%, when a rate below 2% is considered very competitive with affordability constraints impacting

tenants A leasehold estate is an ownership of a temporary right to hold land or property in which a lessee or a tenant has rights of real property by some form of title from a lessor or landlord. Although a tenant does hold rights to real property, a lea ...

. A number of sources have described the situation as a 'rental crisis'. The primary reason for the rental crisis is a lack of supply due to a variety of reasons, including existing

landlords A landlord is the owner of property such as a house, apartment, condominium, land, or real estate that is rented or leased to an individual or business, known as a tenant (also called a ''lessee'' or ''renter''). The term landlord applies ...

selling their rental properties which are being purchased by

owner-occupier Owner-occupancy or home-ownership is a form of housing tenure in which a person, called the owner-occupier, owner-occupant, or home owner, owns the home in which they live. The home can be a house, such as a single-family house, an apartment, co ...

s and some landlords using their properties on the short term rental market such as

Airbnb Airbnb, Inc. ( , an abbreviation of its original name, "Air Bed and Breakfast") is an American company operating an online marketplace for short-and-long-term homestays, experiences and services in various countries and regions. It acts as a ...

. Other commentators cited a lack of social housing being provided by the government. The

COVID-19 pandemic The COVID-19 pandemic (also known as the coronavirus pandemic and COVID pandemic), caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), began with an disease outbreak, outbreak of COVID-19 in Wuhan, China, in December ...

also impacted the rental market with shared households reducing in size and city workers moving to regional areas due to increased

remote work Remote work (also called telecommuting, telework, work from or at home, WFH as an initialism, hybrid work, and other terms) is the practice of work (human activity), working at or from one's home or Third place, another space rather than from ...

Insurance challenges within the property market

A significant number of Australian households are uninsured or underinsured for home building, leaving them financially vulnerable in the face of escalating climate-related disasters. Recent research found that in 2023, approximately one in 30 households lacked home building insurance, and one in 20 were underinsured. This situation is exacerbated by the increasing frequency and severity of climate events, which are driving up insurance costs and making adequate coverage less accessible. This report calls for policy interventions, such as taxing fossil fuel companies and establishing a National Climate Disaster Fund, to mitigate these risks and protect homeowners from potential financial ruin.

References

{{DEFAULTSORT:Australian Property Market Real estate in Australia Economy of Australia Housing in Australia Real estate bubbles of the 2000s