This month, Sydney’s property market reflected a complex mix of long-term growth momentum, short-term affordability pressures, and increasing demand across both metro and regional areas. Government policy, global economic shifts, and the Reserve Bank’s evolving interest rate strategy all contributed to changing buyer behaviour and renewed urgency in addressing housing shortages. The following ten articles reveal the key themes shaping the market in May 2025.

Sydney’s Decade of Growth Dwarfs Recent Price Dip

https://www.domain.com.au/news/how-far-property-prices-soared-in-a-decade-and-what-happened-next-1379958/

While Sydney home values have recently fallen 1.1 per cent from their latest peak, this minor decline is overshadowed by the city’s dramatic 61.6 per cent rise over the past decade, according to Cotality’s April Home Value Index. The broader national trend reveals that long-term capital growth remains robust across most capitals, with Brisbane and Adelaide nearly doubling in value. Cotality’s Eliza Owen attributes this to constrained housing supply, historically low interest rates, and a stronger jobs market. In contrast, cities like Melbourne have delivered more new housing, softening price growth. Rising rates since 2022 have dampened borrowing capacity, although not severely eroding values. ANZ economist Madeline Dunk highlighted that population growth outpacing housing supply continues to fuel prices, particularly in cities with lower stock levels. Both experts believe it is unlikely Australia will see a repeat of the past decade’s growth, especially given rising affordability concerns and political will to moderate price inflation.

Narrabeen Beach

Church Street, Parramatta

City Exodus: Australians Flee Capitals for Regional Lifestyle

https://www.domain.com.au/news/the-number-of-aussies-whove-gone-bush-could-fill-canberra-and-the-sunshine-coast-1379443/

New research by Propertyology reveals that over the past decade, more than 835,000 Australians have relocated from capital cities to regional areas—enough to populate two cities the size of Canberra and the Sunshine Coast combined. Internal migration has caused population declines in 89 out of 137 capital city municipalities, with popular escape destinations including Port Macquarie, Hervey Bay, Wonthaggi, and Moonta. Factors such as improved regional infrastructure, affordability, and remote work flexibility have driven this shift. The trend has intensified since COVID, with both retirees and younger families opting for a better lifestyle, larger homes, and access to natural beauty. Notably, Sydney lost 277,000 residents, the most of any capital, as people left suburbs like Bondi and Balmain. Experts like Bryce Holdaway and Simon Pressley believe this decentralisation will only accelerate, particularly in well-connected regional centres with strong amenities.

What Labor’s Election Win Means for First Home Buyers

https://therealestateconversation.com.au/news/2025/05/12/john-mcgrath-what-labors-win-means-first-home-buyers/1747019172

John McGrath, CEO of McGrath Estate Agents, outlines the implications of Labor’s recent election victory for first home buyers, highlighting three key federal housing initiatives. First, Labor plans to expand the First Home Guarantee scheme by eliminating income caps, increasing purchase price thresholds, and providing unlimited guarantees, allowing buyers to secure a home with a 5% deposit and no lenders mortgage insurance. Second, Labor has committed $10 billion to build 100,000 new homes exclusively for first home buyers, aiming to reduce competition from investors. Third, the Help to Buy shared equity scheme, set to begin later this year, will allow buyers to purchase with just a 2% deposit, with the government taking a 30–40% stake depending on the home type. The scheme’s income and price caps have also been raised, expanding eligibility significantly. McGrath urges prospective buyers to research both federal and state-level support, which together offer a wider array of grants, concessions, and financial relief.

The “Trump Effect” and Australia’s Housing Market Momentum

https://therealestateconversation.com.au/news/2025/05/19/trump-driving-house-price-growth-ray-white/1747607798

According to Nerida Conisbee, Chief Economist at Ray White, global political shifts—particularly the economic policies of Donald Trump—are exerting a measurable influence on Australia’s property market. A jump in national auction clearance rates to 72 per cent in May, the highest since early 2022, is one indicator of this impact. Trump’s new tariffs have fuelled expectations of multiple rate cuts in Australia through 2025, stimulating buyer activity. April saw a 0.4 per cent increase in national house prices and 0.5 per cent for units, with Perth leading growth at 12.2 per cent annually. Investor demand, shifting rate forecasts, and enhanced government support for first home buyers have combined to intensify competition. However, Conisbee notes that a COVID-style boom is unlikely due to higher baseline interest rates and constrained household savings. Despite these differences, Australian property remains resilient in the face of global uncertainty, particularly in key metro markets like Sydney and Melbourne, which are highly sensitive to international developments.

Rate Cuts Revive Risky Borrowing Behaviour

https://www.domain.com.au/news/stretch-themselves-to-the-max-the-risky-property-trend-thats-back-1382874/

Falling interest rates are reigniting a risky trend in the Australian property market, with increasing numbers of home buyers seeking to borrow at their maximum capacity. Following the Reserve Bank’s second rate cut this year—bringing the cash rate down to 3.85 per cent—mortgage brokers report renewed confidence among buyers, despite earlier caution during the rate-hiking cycle. Data from APRA showed that at the 2021 peak, nearly a quarter of buyers held loans equal to six times their incomes, a figure that dropped significantly with rate rises but is now edging upwards. Brokers like Theo Chambers and Anthony Landahl confirm that clients are once again pricing in future rate cuts and aiming for the highest borrowing capacity, despite regulatory serviceability buffers still in place. However, experts warn of the risks of overextension, especially if personal circumstances change or economic conditions worsen. While higher-income borrowers may find themselves more eligible for large loans, the major hurdle for first home buyers remains saving a deposit. Analysts caution buyers not to rely solely on bank figures, urging prudence and financial buffers to guard against future instability.

Rate Cuts Could Drive $141,000 Surge in House Prices

https://www.domain.com.au/news/property-prices-could-rise-by-12-per-cent-with-rba-rate-cuts-1379444/

Australia’s housing market could experience up to a 12 per cent surge in prices over the next two years if the Reserve Bank of Australia cuts the cash rate by the forecasted 1.5 per cent, according to modelling by economist Peter Tulip. This would equate to an additional $141,000 on the combined capital city median house price, with Sydney nearing $1.9 million and Brisbane and Melbourne both exceeding $1.1 million. Analysts, including Metropole’s Michael Yardney and Domain’s Dr Nicola Powell, agree that falling rates boost buyer confidence and borrowing power—conditions which, alongside a shortage in housing supply and expanding first-home buyer incentives, are expected to place further upward pressure on prices. While not all cities will be affected equally—Perth’s growth may slow after rapid recent gains—Sydney and Melbourne are tipped to lead the charge. However, some caution that affordability concerns may intensify, especially if the global economy worsens and deeper rate cuts become necessary to maintain growth.

National Housing Report Highlights Urgent Supply Shortfall

https://therealestateconversation.com.au/news/2025/05/21/state-the-housing-system-report-sounds-the-alarm-bell-property-council/1747786022

The Property Council of Australia has endorsed the findings of the federal government’s State of the Housing System 2025 report, which underscores a persistent shortfall in new housing supply. The report projects 938,000 homes will be built by June 2029—35,000 more than previously forecast but still 262,000 homes short of the national 1.2 million target. Property Council Chief Executive Mike Zorbas welcomed the progress but warned that systemic issues remain, calling for urgent reforms to improve construction productivity, modernise planning frameworks, and reduce excessive government taxes and charges. Zorbas criticised foreign investment restrictions and infrastructure delays, arguing these hinder the delivery of essential housing and commercial developments. He also stressed the importance of accelerating environmental approvals and increasing the intake of skilled migrants to bolster the construction workforce. With more than 30 per cent of a new home’s cost tied up in government levies, the Council argues that immediate structural reform is essential to address worsening housing affordability and supply constraints.

Falling Rates Make Buying Cheaper Than Renting in Some Suburbs

https://www.domain.com.au/news/suburbs-where-its-cheaper-to-buy-a-home-than-rent-2-1384359/

New analysis by Ubank and Cotality reveals that in a growing number of suburbs, particularly unit markets, it is now cheaper to pay a mortgage than rent, thanks to falling interest rates and persistently high rental costs. In Sydney, there are 10 suburbs where buying is cheaper, rising to 65 if buyers can tolerate repayments up to $100 more per week than current median rents. Similar trends are evident in Melbourne and Brisbane, though only units—not houses—qualify. Perth offers the greatest affordability, with both units and some houses meeting the criteria. The calculations assume a 20 per cent deposit and a 30-year mortgage at 6.09 per cent—meaning actual costs may fall further as recent rate cuts flow through. Cotality’s Eliza Owen highlights that while house prices remain out of reach for many, units provide a realistic path to ownership in high-amenity areas. She notes the long-term financial benefits of buying over renting, especially for those willing to rethink the traditional homeownership ideal. Mortgage brokers report rising enquiries from first-home buyers exploring ownership as a way to escape rental inflation, particularly as further rate cuts are anticipated.

Why Housing Affordability Remains Out of Reach in Australia

https://theconversation.com/why-is-it-so-hard-for-everyone-to-have-a-house-in-australia-254464

Despite decades of economic prosperity, homeownership in Australia is increasingly unattainable for many, according to Dr Ehsan Noroozinejad of Western Sydney University. Soaring property prices, rising rents, and insufficient wage growth have combined with policy and planning failures to create a housing crisis. Key challenges include a fragmented policy environment, planning and land-release delays, skills shortages in construction, and demand-side subsidies that inflate prices. Australia is unlikely to meet its goal of building 1.2 million homes in five years without systemic reform. Dr Noroozinejad calls for a unified national housing strategy, faster planning approvals, greater use of prefabricated building technologies, and incentives tied to land release and zoning targets. He also points to international models—like Finland’s social housing investments, Singapore’s prefab efficiency, and Germany’s rent control—as examples Australia can learn from. Without long-term reforms and intergovernmental coordination, short-term political promises risk fuelling further price escalation and leaving future generations locked out of homeownership.

Australia’s Housing Shortfall Requires Urgent, Bold Reform

https://theconversation.com/australia-is-forecast-to-fall-262-000-homes-short-of-its-housing-target-we-need-bold-action-257246

Australia is forecast to fall 262,000 homes short of its 1.2 million housing target by 2029, a failure that threatens to worsen an already critical affordability crisis. Dr Ehsan Noroozinejad of Western Sydney University highlights that no state or territory is currently building enough to meet its share of the goal. The recently released State of the Housing System 2025 report outlines five urgent priorities: increase the social and affordable housing stock to 6 per cent, accelerate construction through modern methods like prefabrication, reform planning systems, improve renter protections, and replace stamp duty with land tax. However, entrenched barriers such as skills shortages, outdated planning processes, and political resistance to higher-density developments and tax reform present significant challenges. The report warns that without a coordinated national response and meaningful reform from federal and state governments, housing stress will persist—affecting renters, first-home buyers, and vulnerable Australians. With mortgage repayments now consuming half of the median household income and rents accounting for a third, bold policy action is not only urgent but essential.

Conclusion

The articles analysed this month reinforce a consistent trend—while the market is resilient and experiencing renewed confidence, housing affordability remains a significant barrier, particularly for first-time buyers and low-income households. With interest rates falling and government incentives increasing demand, Australia’s supply side constraints have become even more pronounced. Systemic policy reform and cross-jurisdictional coordination will be vital in achieving sustainable housing outcomes over the coming years.