The Australian housing market continues to experience a period of adjustment following years of strong price growth and interest rate volatility. While several major cities show signs of stabilisation, affordability pressures remain acute in outer suburbs, particularly for first-time buyers. Recent cash rate cuts and government schemes such as the First Home Guarantee are influencing buyer behaviour, but elevated mortgage rates and high property prices still create challenges for many households.

Investors and owner-occupiers alike are responding to both traditional market factors and emerging trends, including energy efficiency and climate risk considerations. Supply constraints, mortgage stress in suburban areas, and a renewed emphasis on sustainability and resilience are shaping market activity, indicating that buyers and sellers need to be increasingly strategic in their decision-making.

Fortress Suburbs: Sydney’s Unshakable Property Strongholds

https://www.domain.com.au/news/australias-most-exclusive-suburbs-1416132

New research highlights Sydney’s most exclusive “fortress suburbs”, where buyers remain determined to secure a home regardless of price, interest rate movements, or affordability pressures. Bellevue Hill, Mosman, Double Bay, Dover Heights and Woollahra all feature on the list, alongside Toorak in Melbourne and North Adelaide. These blue-chip areas are considered irreplaceable due to their harbour views, lifestyle amenities, village atmospheres, and prestige appeal. Unlike in “bridesmaid suburbs”, where buyers are often willing to compromise for affordability, fortress suburb purchasers refuse to consider alternatives, sustaining significant price premiums compared with nearby areas. Local agents confirm this behaviour, noting that buyers are motivated not only by status but also by lifestyle factors such as coastal access, community networks, and architectural character. The resilience of these suburbs underscores their status as Australia’s hardest and most aspirational markets to buy into.

Fortress: Double Bay and area

… and Stronghold Mosman

Why More Housing Alone Won’t Solve Affordability

https://www.domain.com.au/news/the-graph-that-shows-why-building-more-homes-wont-be-enough-1429865/

New analysis by the e61 Institute reveals that property prices have risen far faster than rents over the past 16 years, particularly in Sydney and Melbourne, challenging the idea that supply shortages alone explain soaring prices. Research manager Dr Nick Garvin argues that while more homes are needed, affordability issues are also driven by cultural and financial factors, including Australians’ strong expectation of capital gains from property. This investor-driven mindset inflates prices well beyond rental growth, suggesting that housing is treated more as a wealth-building asset than a place to live. The study highlights the political challenge of reforming tax settings such as capital gains concessions, which fuel profitability but reduce affordability for future generations. While additional supply remains essential, researchers conclude that without broader structural and cultural changes, new housing alone will not be enough to make buying a home more accessible.

Auction Clearance Rates Hit Two-Year High

https://therealestateconversation.com.au/news/2025/09/22/capitals-highest-preliminary-clearance-rate-since-october-2021-cotality/1758512668

Australia’s capital cities recorded their strongest preliminary auction clearance rates since October 2021, with 77.9% of homes selling under the hammer last week. A total of 2,675 homes went to auction, the highest volume since June, led by Melbourne with 1,322 listings and a clearance rate of 78.6%. Sydney followed closely with 925 auctions and a 77.9% clearance rate, its fourth-highest result this year. Adelaide also stood out, achieving an impressive 85.5% success rate, its second-highest this year. Smaller capitals varied, with Brisbane clearing 65.6% of properties, Canberra lifting volumes to 105 auctions, and Tasmania selling all three of its scheduled homes. While Perth and Tasmania saw minimal activity, the overall figures point to a resurgence in buyer demand, despite expectations that auction numbers will dip slightly in the coming week due to seasonal factors such as the AFL grand final in Melbourne.

New Zealand Housing Market Stabilises

https://therealestateconversation.com.au/news/2025/09/22/nz-housing-market-reaches-equilibrium-ray-white/1758495780

New Zealand’s housing market has entered a period of equilibrium following three phases of post-pandemic adjustment. After a speculative boom during the pandemic and a subsequent correction that saw sales drop 41% and prices fall 19%, the market began recovering in early 2023. As of August 2025, the median house price sits at $761,000, with listings plateauing at pre-pandemic levels and sales stabilising for the first time since the recovery began. Lower interest rates are supporting buyers, particularly in the lower end of the market, while major cities like Auckland and Wellington face declining long-term growth. Regional markets such as Christchurch, Gisborne, Southland, and Nelson show modest growth, indicating a shift away from investment-driven demand towards intrinsic housing needs. Overall, the market now reflects a healthier, more sustainable balance between supply, demand, and affordability, prioritising genuine homeownership over speculative gains.

How to Sell in an Active Spring Market – John McGrath

https://therealestateconversation.com.au/2025/09/21/john-mcgrath-how-sell-active-spring-market/1758445003

John McGrath, CEO of McGrath Estate Agents, provides guidance for sellers navigating Sydney’s active spring property market. Despite strong demand, rising auction clearance rates, and improved capital growth, he warns vendors against complacency. McGrath emphasises the importance of retaining prudence, particularly as sellers may soon re-enter the market themselves and face costs such as stamp duty. Buyers are increasingly well-informed, using data and support from family to make educated decisions, so sellers must present their homes effectively. He advises considering buying before selling to better understand pricing, and ensuring properties are impressively staged and marketed to maximise sale outcomes. Overall, McGrath highlights that even in a buoyant market, careful planning and attention to presentation remain key to achieving the best results.

Climate Risks Could Slash Australian Property Values by $611 Billion

https://theconversation.com/new-climate-report-warns-property-prices-face-a-611-billion-hit-what-does-that-mean-265284

A new climate risk assessment warns that Australian property values could face a cumulative loss of up to $611 billion by 2050 under a 3°C warming scenario. Senior researcher Ehsan Noroozinejad highlights that this figure reflects reduced market values, as buyers factor in rising risks, higher insurance premiums, and lower bank valuations, rather than direct rebuilding costs. Currently, more than 1.5 million homes are already located in high or very high-risk areas for floods, bushfires, cyclones, and heatwaves. Without proactive adaptation measures, the number of vulnerable properties is expected to grow, with insurance affordability and availability likely to deteriorate, potentially reducing property values by 10% in some areas. The report urges governments, communities, and households to act through national floodplain mapping, open-access extreme weather models, continuous post-event monitoring, and regional testbeds, while households can implement practical adaptations such as flood-tolerant materials, bushfire protections, and microgrids. Overall, climate change is positioned as a growing structural factor influencing property prices, particularly in coastal and hazard-prone areas.

What Pausing the National Construction Code Means for Builders and Home Buyers

https://theconversation.com/heres-what-pausing-the-national-construction-code-means-for-builders-and-home-buyers-263812

A federal government decision to pause changes to the National Construction Code until mid-2029 aims to provide stability for builders and accelerate housing approvals. Senior researcher Ehsan Noroozinejad explains that while urgent safety and quality updates will still proceed, the pause will reduce the need for redesigns and re-submissions caused by frequent code changes. Builders can benefit from faster approvals, easier compliance, and lower costs, although land prices, labour shortages, and financing pressures remain unaffected. The pause preserves current energy efficiency and safety standards while allowing time to adopt modern construction methods such as prefabrication and modular builds. To maximise the benefits, Noroozinejad suggests national adoption timetables, technology support, incentive schemes for designs exceeding minimum standards, low-friction fixes for recurring issues, and clear pathways for offsite construction. Combined with the federal government’s expanded First Homebuyer Guarantee, these measures aim to improve housing supply and affordability without compromising safety or quality.

How Energy-Efficient Features Can Boost Home Value

https://www.domain.com.au/news/how-to-make-your-home-more-comfortable-and-add-23000-to-its-value-1432267/

Cotality’s “Watt’s it Worth” report shows that Australian buyers increasingly value energy-efficient homes, with solar panels adding around $23,000 (2.7%) to national property values, and a one-star increase in NatHERS rating adding $10,560 (1.3%). Value uplift varies by location, with Hobart, Brisbane, and Melbourne seeing the largest premiums, and regional areas often benefiting most due to lower base prices. Experts note that sustainable features, such as solar and energy efficiency upgrades, are a win-win, offering comfort and cost savings while increasing resale value. High uptake of solar in certain suburbs, like Bungarribee in Western Sydney, demonstrates how mandatory sustainable standards can elevate community reputation and attract premium prices. Overall, energy efficiency is emerging as a key factor in buyer decision-making and property valuation, particularly in regional and affordable markets.

Mortgage Stress Concentrated in Outer Suburbs

https://www.domain.com.au/news/the-suburbs-where-home-owners-cant-afford-their-mortgages-1432762/

Homeowners in outer suburbs of Sydney and Melbourne are experiencing higher mortgage arrears than those in more affluent areas or other states, despite recent cash rate cuts. S&P Global Ratings data shows prime mortgage arrears remained low overall at 0.84% in July, but were higher in NSW (0.99%) and Victoria (0.96%). Suburbs such as Narre Warren, Cranbourne, Point Cook, Casula, and Bateau Bay are particularly affected, largely due to households carrying higher debt relative to income in mortgage-belt areas. While interest rate reductions this year are easing some pressure and supporting property prices, economists warn that many outer suburban and younger households remain vulnerable to cost-of-living pressures. Homeowners are encouraged to engage with lenders to explore refinancing, interest-only options, or loan term extensions to manage stress.

Rental Costs Highlight the Value of the First Home Guarantee

https://www.therealestateconversation.com.au/news/2025/09/29/rental-costs-shine-new-light-the-first-home-guarantee-cotality/1759102505

Rising rental costs are reshaping the appeal of the First Home Guarantee, with new analysis from Cotality showing that entering the property market with a 5% deposit can outweigh the higher interest costs compared to saving for a traditional 20% deposit. Since January 2020, median weekly rents in Australia have risen by over $200 per week, translating to more than $10,000 annually. For first-home buyers, the scheme allows access to home ownership sooner, avoiding years of high rental payments. In Sydney, for example, a 5% deposit could save an estimated $251,000 in rent over the time it would take to save a full 20% deposit.

While the smaller deposit increases long-term interest costs, it may still be financially advantageous for renters, particularly in high-rent cities. Cotality’s modelling compares the additional interest cost of a 5% loan with potential savings from avoiding lenders mortgage insurance (LMI) and paying less rent, showing that early entry into the housing market can offset some of the costs. The analysis assumes a 30-year loan at a long-run 5.5% interest rate and highlights that individual circumstances, including rental payments and purchase price, will influence outcomes.

The expanded scheme—covering more places, higher price caps, and broader income eligibility—is expected to provide a short-term boost to home values up to the scheme’s thresholds. However, economists note that while the scheme eases the deposit hurdle, it is primarily a demand-side stimulus and does not address the underlying affordability issues driving high deposits and rising rents.

Conclusion

Across Australia, housing markets are navigating a complex mix of supply constraints, interest rate fluctuations, and evolving buyer priorities. Outer suburban mortgage-belt areas are particularly vulnerable to financial stress, while strong market segments benefit from capital growth and high auction clearance rates. Rising rental costs and government schemes continue to influence first-time buyers, altering traditional affordability dynamics.

Sustainability and climate resilience are emerging as critical factors shaping both property values and long-term market stability. Energy-efficient homes and solar installations are increasingly valued, while climate risk assessments highlight the potential for substantial property devaluation in high-risk areas. Builders and regulators are responding with policies aimed at improving supply, streamlining approvals, and ensuring safe, resilient housing. Overall, market participants must balance traditional property metrics with environmental and financial considerations to make informed decisions.