Australia’s Property Market: 6 Years of Change & What Lies Ahead

Over the past six years, the Australian property market has seen rapid price growth, shifting investor trends, rising rents and unprecedented interest rate movements.

But how does this compare to the last decade and what can we expect going forward?

In today’s blog, we cover:

How Much Has the Market Grown?
Capital Cities vs. Regional Markets: The Surprising Performance Gap
Interest Rate Movements: The Impact of Historic Lows & Sharp Rises
Serviceability Buffers: How Lending Rules Have Changed
Investor Activity: The Decline & Rebound in Investor Lending
Housing Supply & Rental Pressure: The National Shortage Crisis
Mortgage Trends: The Rise of Broker-Originated Loans & Fixed Rates

How Much Has Australia’s Property Market Grown? The Trillions Added to Property Value

The total value of Australian residential real estate has grown from $6.95 trillion in 2019 to over $11 trillion today.

This represents a national annual growth rate of 8.28%.

Despite market slowdowns, property has continued its long-term upward trend, driven by population growth, supply shortages and inflationary pressures.

While many expected property prices to stagnate or decline, the data shows that real estate remains a powerful long-term asset, even through economic uncertainty.

Capital Cities vs. Regional Markets: The Surprising Performance Gap Since 2019

One of the biggest shifts in the past six years has been the rise of regional property markets.

Before COVID, capital cities dominated price growth.

However, when lockdowns hit, demand for regional properties skyrocketed as people sought more space and lifestyle flexibility.

While Sydney and Melbourne prices struggled to increase post-COVID, regional areas outperformed many capital cities.

But will this trend for Australian property continue?

With property prices now stabilising, driven by overseas migration and the return to office mandates from companies and governments, some investors are speculating whether the price gap between regional and cities will narrow and begin to normalise

Source: CoreLogic

Interest Rate Movements: The Impact of Historic Lows & Sharp Rises

Interest rates have been on a wild ride:

2011 – 2019: The RBA had gradually been decreasing the cash rate from 4.75% to 0.75% over 8 years.
2020: As Covid hit the RBA slashed the cash rate from 0.75% to a record low of 0.1% to stabilise peoples finances due to job losses. This along with significant government cash handouts (JobKeeper, JobSeeker, HomeBuilder) and lock downs causing forced savings triggered a property boom.
2022-2023: The fastest rate hikes in history took the cash rate from 0.1% to 4.35% across 13 rate hikes over only a year and a half, squeezing borrowing power. Many mortgage holders had never experienced interest rate increases with these being the first increases seen in 12 years.
2024-Present: With a recent rate cut of 0.25% taking the cash rate to 4.10 and speculation of more to come, how will this shape future property values?

This extreme shift has reshaped affordability, forcing many buyers and investors to rethink their strategies.

Serviceability Buffers: How Lending Rules Have Changed

One of the biggest shifts in borrowing over the past decade has been APRA’s serviceability buffers – a key factor influencing how much buyers can borrow.

In 2014, APRA introduced a 2% serviceability buffer, requiring lenders to assess borrowers at rates 2% higher than their loan’s actual interest rate.
In 2021, this buffer increased to 3%, significantly reducing borrowing capacity.
These APRA restrictions, along with other regulatory measures and the Banking Royal Commission from 2017 to 2019, significantly tightened lending standards.
As a result, borrowers were required to provide a highly detailed breakdown of their living expenses – an unprecedented level of scrutiny that had not been required for loan applications before.

While these rules were designed to protect borrowers from financial stress, they also contributed to declining affordability as interest rates surged.

Now, with interest rates stabilising and lending conditions shifting, there is growing speculation that APRA may lower the serviceability buffer – a move advocated by the Coalition, who are currently leading in the polls for the next election. If implemented, this could increase borrowing capacity and drive renewed demand in Australia’s property market.

Investor Activity: The Decline & Rebound in Investor Lending in Australian Property

Investor activity peaked at a record high in 2015 but declined sharply following APRA restrictions and reforms prompted by the Banking Royal Commission, reaching a decade-low in 2020.

However, investor lending has surged back, now sitting at 38% of all new loans – above the 10-year average of 33%.

What’s driving this resurgence?

Stronger rental yields, better borrowing conditions and shifting sentiment have brought investors back into the mid-tier cities where there was perceived value.

Source: CoreLogic

Australia’s Housing Supply & Rental Pressure: The National Shortage Crisis

One of the most pressing challenges in today’s market is rental shortages and housing supply constraints.

Rental yields hit record lows in 2021, but have since rebounded.

Vacancy rates remain historically low in Australia’s property market and overseas migration hit record highs, leading to strong rental increases.

Construction challenges, including rising costs and trade shortages, exacerbated by government infrastructure projects drawing workers away, have slowed new housing developments.

With the government’s goal to build 1.2 million homes in five years, can supply ever catch up with demand?

Source: CoreLogic

Mortgage Trends: The Rise of Broker-Originated Loans in Australia’s Property Market

Over the past decade, the role of mortgage brokers has grown significantly. In 2014, brokers arranged around 50% of home loans – today, it’s just over 74%

This shift reflects how borrowers are increasingly relying on brokers to navigate complex lending conditions, secure competitive rates and refinance strategically.

One key reason for this trend is the high level of customer satisfaction in the broker industry.

According to AFCA (Australian Financial Complaints Authority), 0.17% of all complaints lodged in the “banking and finance” category relate to mortgage brokers, whilst 99.83% are lodged against banks and lenders direct.

This is despite 7 out of 10 loans being originated by mortgage brokers.

Another significant shift came with the introduction of the Best Interests Duty (BID) in 2021, requiring mortgage brokers to act in the best interests of their clients.

In contrast, banks and lenders are not legally required to prioritise a customer’s best interests when recommending loan products.

Additionally, mortgage brokers face significantly higher compliance obligations than banks and lenders, who are not required to complete and provide a Credit Proposal or meet the same extensive regulatory requirements.

Ultimately, banks and lenders—and their staff—function primarily as product sellers, offering only their own mortgage products

The introduction of BID has further strengthened consumer confidence in brokers, making them even more than ever, the preferred choice for borrowers seeking independent advice.

With increasing regulation, consumer protections and a growing preference for broker services, the mortgage industry has evolved significantly—positioning brokers as a trusted and essential part of the home loan process.

With so much change in the past six years, what’s next for the property market?

We will continue to keep you updated, educated and informed.