Australian Housing Market — Monday, 17 November 2025

## Headline summary The Australian housing market is gathering momentum: national dwelling values recorded their fastest monthly rise in more than two years in October, rental supply remains extremely tight with vacancy around 1.2%, and investor borrowing is accelerating sharply. For investors, the combination of tight supply, rising demand and relatively stable credit conditions is creating opportunities — but rising prices mean margins for error are shrinking. ## National overview (prices & auctions) National home values rose around 1.1% in October, the strongest monthly result since mid-2023, with annual growth now sitting near 6%. Supply remains well below the long-term average, with total listings tracking roughly 18% under the five-year mean. This imbalance is keeping upward pressure on prices through spring. Auction markets remain active. Combined-capital clearance rates are generally holding in the high-60s to low-70s, and volumes have lifted into typical late-spring territory. Well-located, move-in-ready homes are attracting the strongest competition, while compromised stock is taking longer to shift. ## Rentals (vacancy & yields) The rental market remains historically tight. National vacancy is holding close to 1.2%, with some capitals — such as Perth and Adelaide — even lower. In practical terms, tenants are still competing for a limited pool of rentals, and investors are experiencing very short vacancy periods between tenancies. Advertised rents have risen by roughly 4–5% over the past year, slower than the burst of growth seen in 2022–2023 but still outpacing wage growth in many locations. For investors, this supports stable or improving yields, although the impact is uneven: some inner-city unit markets are normalising, while many family-home corridors remain undersupplied. ## Lending and finance (investor activity) Investor activity is clearly strengthening. Recent lending data show the number of new investor loan commitments rising in double-digit percentage terms over the past quarter, with the value of investor loans up by a similar margin. Investors now account for close to 40% of new dwelling finance — a share last seen in the mid-2010s. This resurgence is being driven by a mix of tight rental conditions, renewed price growth and expectations that interest rates are likely to be more stable through 2025–2026. Refinancing activity remains elevated as borrowers look to tidy up existing structures and lock in sharper deals. ## Risks and watch-items - **Affordability constraints:** Rapid price growth is stretching borrowing capacity for new entrants and lower-income households. - **Interest-rate uncertainty:** While rates are currently on hold, any uplift in inflation or a change in central-bank rhetoric could slow buyer demand. - **Supply shifts:** A meaningful lift in new listings, or a wave of new completions from delayed construction projects, could ease competition and temper price growth. - **Regulatory intervention:** Strong investor lending may attract further attention from regulators, which could lead to tighter credit conditions in future. ## Firm Foundations Perspective From the perspective of Firm Foundations Property, current conditions represent a selective opportunity rather than a blanket “buy everything” signal. We favour markets where: - vacancy rates are below ~1%; - future housing supply is constrained; and - there are clear employment and population drivers underpinning demand. Within those markets, we focus on well-located, low-maintenance homes that are immediately rent-ready. With competition increasing, investors need to be precise on price, clear on their yield targets and disciplined about avoiding over-capitalisation on renovations or speculative plays. ## Conclusion Australia’s housing market has shifted into a higher gear: stronger price growth, tight rental supply and resurgent investor finance. For disciplined investors, there is still meaningful opportunity — provided decisions are grounded in data, suburb-level fundamentals and conservative serviceability assumptions. The priority over the next phase of the cycle is to be selective, not rushed, and to favour markets and assets with enduring demand drivers rather than short-term noise.