Australia’s property market gains momentum as investors return
Stable market conditions and the recent Reserve Bank of Australia (RBA) rate cut have increased property demand, with investor commitment growing despite higher property prices and expenses.
In a recent episode of The Smart Property Investment Show, Dr Diaswati Mardiasmo, chief economist at PRD, unpacked the network’s latest Australian Economic and Property Update report for the first half of 2025.
Mardiasmo said that economic indicators, local and global events, along with continuous supply and demand, have contributed to a stable property market, encouraging buyers to return.
“Right now, the time-to-buy a dwelling index is up for every single state, which indicates a good property demand level,” she said.
The report showed that buyers’ sentiment has risen nationwide over the past 12 months, with Victoria and South Australia leading the country, recording a 43 per cent and 32.8 per cent increase in the time-to-buy a dwelling index.
In Sydney, the time-to-buy a dwelling index rose to 19.5 percent in January, representing an increase of 91 index points over the past 12 months leading to January 2025.
“The last time it was this high in Sydney was a while ago, in September 2022,” Mardiasmo said.
According to the chief economist, the recent RBA rate cut was a key factor in boosting buyer sentiment, as prospective home owners experienced a slight increase in borrowing capacity and felt more confident about repaying their mortgages.
Similarly, Mardiasmo said the current economic conditions have incentivised investors over the past 12 months, with investors’ finances increasing by 22 per cent.
“It is massive,” she said.
Mardiasmo added that investors’ commitment declined when the cash rate hiked and subsequently tightened the rental market.
“You can’t blame investors because they must ensure the investment is financially viable,” Mardiasmo remarked.
She said that in addition to better financial conditions, the recent increase in dwelling’s supply prompted more investors to return and relieve the rental market.
The report showed that despite the market being more attractive, the average amount investors commit to their properties has risen by about 7.8 per cent, driven by higher property prices, home insurance, water and energy rates.
Despite higher commitments, Mardiasmo said rental yields and vacancy rates remained tight, particularly in regional areas.
Data showed that vacancy rates nationwide are around 1.3–1.5 per cent, with some regions as low as 0.2 per cent.
“Right now, I would say, is the ideal time for investors to make their move and benefit from better borrowing power and hopefully slightly lower mortgage repayments,” Mardiasmo said.
“So, yes, on one side, the amount you have to commit has increased, but a lot of the costs have stabilised now while the vacancy rates, the rental yield are still holding up.”
Mardiasmo said investors can find hotspots nationwide depending on their portfolio strategies.
“From a growth perspective, you’ve got Victoria. From a dollar amount perspective, the lowest amount investors commit to is in WA,” she concluded.
For more insights into the property market, listen to the full conversation here.