9. Government Intervention – Housing Policies to the Rescue?
With housing affordability and supply now white-hot political issues, governments have stepped in with various interventions. From federal initiatives to state reforms, there’s a flurry of efforts aimed at improving housing supply and unlocking land, especially in high-demand areas. Here’s a rundown of what’s happening on the policy front:
National Housing Accord & Targets:
The Federal Government in late 2022 announced a Housing Accord with a target to build 1.2 million new homes over 5 years (2024–2029). This ambitious goal (an average of 240k/year) is meant to accelerate construction. In 2023, the target was even hinted to increase to 1.5 million. To support this, the 2024–25 Budget included a $2 billion Social Housing Accelerator (immediate funding to states for social housing) and other incentives. They also struck a deal with states in National Cabinet to provide $3 billion in performance-based funding – essentially, extra $$$ for states that exceed their housing targets by 15% and boost supply. The idea is to “unlock supply” by encouraging pro-development planning and zoning at the local level.
Housing Australia Future Fund (HAFF):
After some political wrangling, the federal government passed the HAFF in September 2024 – a $10 billion fund to invest and generate returns to build social and affordable housing (targeting 30,000 homes over 5 years). While not directly affecting private market supply, it’s part of the broader push to add dwellings and ease rental stress.
State planning reforms:
Victoria made big news with its 2024 Housing Statement – a suite of policies to boost housing in that state, which has struggled with low supply (Melbourne had been under-building). Key measures: temporary stamp duty concessions for off-the-plan purchases (to encourage unit development), incentives for build-to-rent projects, and importantly, planning reforms to allow more subdivision and medium-density housing in established suburbs. They want to make it easier for homeowners to split their lots and build townhouses/duplexes, injecting more housing in desirable areas without needing huge greenfield estates. Streamlining approval processes and reducing “red tape” is a theme – essentially prodding councils to approve more infill development. If successful, this could unlock thousands of new townhomes and units in areas that already have infrastructure, addressing the NIMBY bottleneck.
Land release and infrastructure:
Western Australia is tackling the issue by literally unlocking land. The WA Government announced a $400 million Housing Enabling Infrastructure Fund in late 2024 to invest in critical water, sewer, and power infrastructure to support new housing estates. This fund will target key growth corridors around Perth and major regional towns, allowing the release of thousands of new residential lots that are currently held back by lack of infrastructure. By funding the pipes and wires, WA hopes to “unlock more land in high-priority areas” and maintain a pipeline of housing supply. They also invested $105m to fast-track 28,000 new lots and an $80m fund for infill apartments and key worker housing. It’s a full-court press to get more homes built in a state that’s booming.
Other state moves:
NSW has offered incentives and set housing targets for councils, and rezoned some areas for higher density (particularly around transport hubs). NSW briefly had a stamp duty alternative for first home buyers (annual land tax option), though that policy changed with the 2023 change of government. Queensland has a 10-year housing supply strategy and is investing in social housing plus speeding up land approvals in growth areas (e.g., around Brisbane ahead of the 2032 Olympics). Across the board, states are reducing developer charges, freeing up government-owned land for development, and even converting unused commercial buildings to residential.
Government vs. the market:
Will these interventions work? It’s a mixed bag. The Property Council welcomed rising approvals in 2024 but bluntly said “we need a bigger increase” to meet targets. They pointed out that in the first half-year of the 1.2M homes plan, we’re already behind pace. Slow planning approvals, labor shortages, and NIMBY resistance remain hurdles. The truth is, policies take time: you can announce land releases and zoning changes, but it could be years before homes are delivered.
However, the political will to address housing is stronger than it’s been in decades. Housing is front-and-center in the coming federal election – voters are cranky about high rents and prices. Expect to hear proposals like reforming negative gearing or stamp duty (as mentioned in Domain’s predictions ), expanding first-home buyer schemes, and big investments in supply. For instance, there are discussions to replace stamp duties with land taxes (to reduce disincentive to move), and to encourage institutional investment in rental housing.
One quip is that governments are finally moving from NIMBY to YIMBY (“yes in my backyard”). Federal Treasurer Jim Chalmers said “we’re pulling every lever to boost housing supply.” In the end, policy can grease the wheels, but it’s the market that must turn the plans into roofs and walls. 2025 will likely see incremental improvements – a few more cranes on the skyline, a few more lots coming to market – but the big structural changes (like significantly higher annual construction) may take longer. Still, for would-be buyers, any extra supply is welcome. And for renters, government intervention can’t come soon enough.
10. Emerging Market Trends – Longer Selling Times, Bigger Discounts, Slower Rents
The property market of 2025 has subtly changed its rhythm compared to the frenzied days of 2021. Several new trends are emerging that indicate a more balanced (dare we say normal?) market. Notably, properties are taking a bit longer to sell, sellers are having to negotiate on price more, and rent growth, while still strong, is slowing from its extreme highs. Let’s unpack these:
Median days on market (orange = Feb 2025, grey = Feb 2024). Nationally, the typical property took 42 days to sell vs 33 days a year earlier, as buyers became a bit more discerning.
Longer selling times:
Gone are the days of weekend auctions where every listing was snapped up faster than a free snag at Bunnings. The median time on market for properties has lengthened. Nationally, the median days on market rose from a low of 27 days in Q3 2024 to about 42 days by early 2025. In other words, what used to sell in under 4 weeks is now taking 6 weeks on average. Buyers have more choice and are less FOMO-driven, so they’re willing to take a bit longer to make decisions (and perhaps play hardball on price). Markets like Canberra (55 days) and Regional South Australia (46 days) currently have some of the longest selling times – interestingly, those are also markets that cooled off recently.
This trend is actually a return to normalcy. A 6-week selling period is not unhealthy – it indicates a more balanced market rather than an ultra-seller’s market. Sellers need to adjust expectations; you might not get 10 offers in the first week anymore. For buyers, this is great news – it means less pressure to rush. You can do your due diligence, maybe negotiate after an inspection, without fearing the property will be gone overnight.
Bigger vendor discounts:
Along with longer selling times comes a rise in negotiation and discounting. The days of buyers paying above the asking price every time are over (except for the hottest segments). Median vendor discounting – the average reduction from the initial listing price to final sale price – has widened slightly. Nationally, it moved from about 3.5% to 3.6% in recent months. That might sound small, but it’s a reversal from the tightening discounts of the boom period. In most capital cities, vendors are now having to give a bit more ground to get a deal done. For example, Melbourne and Sydney have seen discounting increase as buyers negotiate harder. Hobart was the only capital that saw discounting tighten (3.6% down to 3.5%) because its market had already corrected.
A 3.6% discount means a seller of a $1,000,000 home is, on average, accepting around $964,000 – about $36k off their initial price. In a hot market they might have gotten 100% or more of asking. Now buyers have a bit of haggling power. It’s not a buyer’s market everywhere, but definitely more balanced. Properties that overshoot on price are sitting unsold until they adjust. Savvy buyers are sensing this and coming in with lower offers (sometimes aided by the data that’s now widely available on comparable sales).
Slowing rent growth:
After two years of eye-watering rent increases, the rental market is cooling off slightly (though tenants may chuckle that it’s still very tough out there). Annual rent growth nationally has moderated to about +4.1% as of early 2025, down from a peak of +8.3% annual growth around March 2024. In other words, rents are still rising, but at about half the rate of a year ago. Vacancy rates remain low in most cities (under 1% in many cases), but the pace of rent hikes is easing as tenants reach affordability limits and more supply gradually comes on line.
For instance, some inner-city apartment markets have seen increased vacancies as students/immigrants reshuffle, and new units complete, taking edge off rents. KPMG projects rent growth will be around 3.5–4.5% per year for the next two years, much closer to historical averages. This is partly because they expect new dwelling completions and normalising migration to balance the rental market a bit. We’re already seeing signs: the CoreLogic rolling 12-month rent change is trending down, and in some pockets (say, luxury apartments in Melbourne), rents have even plateaued.
For investors, this means the days of easily jacking up rents by 10% at each lease renewal might be over (except perhaps in tight regional markets).
Gross rental yields have steadied around 3.7% nationally – an improvement for some cities compared to the peak price period, but still moderate. Investors should factor in more normal rent growth in their cashflows going forward. For renters, any relief is welcome – though +4% is still above wage growth, at least it’s not +10% like in 2022.
Aside from these, a few other micro-trends are worth noting:
Auction clearance rates have normalized.
In early 2023 they were very low, then picked up; in Feb 2025 they’re sitting in the low 60s% for capital cities, which is bang on the decade average . This indicates neither a runaway sellers’ market nor a dire buyers’ market – just balanced.
High-end vs low-end
Interestingly, there are signs the top end of the market is perking up again. In Feb 2025, the upper quartile of home values in capitals rose 0.2% (after falls prior) , signaling wealthier buyers are re-emerging now that interest rates are easing. The lower end still outperformed (+0.4%), but the gap is closing . Often, the luxury segment is first in and first out of downturns – so a turnaround there can be a bellwether of recovery.
Investors re-entering:
Investor activity was subdued in 2022–24 due to rate hikes and lending constraints. 2025 may see more investors coming back, enticed by stable yields and the prospect of capital growth. Lending finance data in early 2025 showed a slight uptick in investor loan approvals.
In summary, 2025’s property market has cooled from a boil to a simmer. Homes are sitting on the market a bit longer, and buyers have opportunities to negotiate – a far cry from the craziness of a couple of years ago. For first-home buyers, this is a breath of fresh air: you might actually inspect a property twice before making an offer, and perhaps snag a small discount. For sellers, it’s a reminder to be realistic on price and to put in the effort (marketing, styling, etc.) to attract buyers.
Meanwhile, renters might see fewer double-digit rent hikes, though relief will be gradual until more supply is built. The market equilibrium is improving, which is healthy in the long run. A pundit wryly noted, “In 2025, the property game is no longer musical chairs at warp speed – it’s more a steady waltz. There’s still competition, but at least you won’t get trampled trying to secure a home.”
Wrapping up: The Australian property landscape in 2025 is characterized by resilience and adaptation. Prices are rising, but moderately; the market is recovering, but selectively; interest rates are falling, but carefully; affordability is challenging, but being addressed in new ways; supply is constrained, but governments are reacting; regionals are thriving, even as some big cities take a breather; the economy is supporting housing, and demographics are reshaping it; and the market’s tempo is calming down to something more sustainable.
For property investors, the outlook is one of cautious growth – the fundamentals (population, economy, undersupply) support values, but picking the right markets (perhaps Townsville over Sydney, or units in Brisbane over houses in Hobart) will be key. For first-home buyers, patience and strategy will pay off – 2025 might offer windows of opportunity, especially if you take advantage of any dip in competition early in the year or new government incentive. Keep an eye on interest rates and policy changes, as these could shift the goal posts.
In the end, Australian real estate in 2025 isn’t a one-way bet or a uniform story. It’s a patchwork of mini-markets and trends – some hot, some not – but overall, it’s moving in a positive direction. As we Aussies like to remain hopeful: the great Australian dream is evolving, not disappearing. Investors and home buyers who do their homework on these trends will be best placed to make that dream a reality in 2025.