Dear Client,
FEDERAL ELECTION WRAP UP
The 2025 Australian federal election concluded with Prime Minister Anthony Albanese’s Labor government maintaining power. Housing affordability remained a central issue, prompting significant policy commitments. Labor pledged $10 billion to construct 100,000 homes for first-time buyers, aiming to alleviate the housing crisis (I am not sure 100,000 homes will do it). Additionally, the government introduced the “Help to Buy” scheme, offering low-deposit home loans and eliminating mortgage insurance for eligible buyers. These initiatives are expected to ease the path to homeownership for many Australians but may also drive prices further out or reach!
For landlords, the landscape is evolving. The NSW government has implemented reforms such as those we are already working with in SA which include banning no-grounds evictions and enhancing tenant rights. While these changes aim to protect renters, landlords face increased regulatory requirements and potential impacts on rental yields. However, the government’s focus on increasing housing supply could stabilize rental markets in the long term but with a Big Australia Policy we believe the need for privately supplied rental properties in Australia will remain strong and a vexed electoral issue. (Labor’s “Big Australia” policy refers to the government’s strategy of increasing Australia’s population through higher immigration levels. Under Prime Minister Anthony Albanese, the government has overseen a significant rise in net overseas migration, with over one million people arriving between mid-2022 and September 2024).
The Reserve Bank of Australia (RBA) has initiated rate cuts, with the cash rate reduced to 4.10% in March 2025. The Big Four banks anticipate further reductions, with forecasts suggesting the cash rate could decrease to approximately 3.35% by the end of 2025. This trend may provide some financial relief to homeowners and investors, again potentially stimulating the housing market and driving price.
With a pending state election, it is important to see what the state Labor government is doing to address the state’s housing challenges ahead of the 2026 state election. They have launched their comprehensive Housing Roadmap which focuses on increasing housing supply, enhancing affordability, and improving public housing services.
Key Housing Initiatives:
- Land Release and Urban Planning: The government has removed Environment and Food Protection Areas (EFPA) and urban growth boundaries, unlocking approximately 61,500 new homes across greenfield estates. Notable developments include Two Wells, Roseworthy, Murray Bridge, and Victor Harbor. This move aims to accommodate the projected need for 315,000 new homes over the next 30 years to support an additional 670,000 residents
- Public Housing Expansion: Labor has committed to the first substantial increase in public housing in a generation, with plans to build an additional 564 public homes and halt the sale of 580 others. This initiative aims to address the growing demand for affordable housing and supports vulnerable communities.
- Affordable Housing Support: The government offers various programs to assist first-home buyers, including interest-free starter loans to cover stamp duty and low-deposit loans for graduates purchasing new builds. These measures aim to make homeownership more accessible, though challenges persist due to high demand and limited supply.
As the 2026 state election approaches, the government’s housing strategies will likely be a central topic of discussion among voters and policymakers.
THE RISE OF THE MILLION DOLLAR SUBURB
CoreLogic’s recent analysis highlights the significant impact of rising property prices on the Australian housing market, particularly concerning what a $1 million budget can now purchase.
In Sydney, nearly two-thirds of properties are priced over $1 million, reflecting a median value of $1,195,000 for all houses and units in Greater Sydney as of April 2025. This trend indicates that with a $1 million or lower budget, buyers are increasingly limited to smaller or more remote properties compared to a decade ago
This shift underscores the growing challenges for prospective homebuyers, especially first-time buyers, in affording properties within major metropolitan areas.
The data suggests a need for policy interventions and strategic planning to address housing affordability and ensure equitable access to homeownership across the country.
In August last year, the median house value across the combined capitals surpassed the million-dollar-mark, breaking the perception that Sydney was the only millionaire’s club for homeowners. New research from Cotality (formerly CoreLogic), shows over a third of homes nationally are now valued at $1 million or higher, with that vast amount of money buying less in the housing market now than ever before.
Data going back ten years shows the portion of dwellings valued at $1 million or more has risen from 9.7% in April 2015 to 34.4% as of April 2025. This includes 19.4% of homes across regional Australia (up from just 0.5% a decade ago), and 41.6% across the combined capitals (up from 14.3% a decade ago). The trend reflects strong price growth across Australia’s housing market, where values have increased 67.3% in the past ten years.
Sydney had the highest portion of homes over $1 million, where almost two-thirds of stock are past the million-dollar threshold (64.4%). This is unsurprising given the median value of all houses and units in greater Sydney was $1,195,000 in April.
Even for those with a budget of $1,000,000, the kind of property available in Sydney is generally smaller, and further afield than a decade ago. Only houses with five or more bedrooms had a median value over $1 million in Greater Sydney a decade ago. Now the median house value for all bedroom types is over $1 million, ranging from a median of $1.3 million for a three-bedroom house, to $2 million for a house with five or more bedrooms.
Brisbane had the next highest proportion of homes values at $1 million or more, at 40.2%. This is up from just 2.8% a decade ago and is the highest increase in the period of any region.
Brisbane will almost certainly be Australia’s next ‘million dollar’ house market of the capital cities, with a current median house value of $990,000. Even if Brisbane house values rise half the rate that they did in the 2024 calendar year, they would hit $1,010,000 by the end of 2025.
Third in the capital city rankings was Melbourne, where 30.9% of homes have a $1 million plus value as of April. This is down from a high of 33.1% in January 2022, shortly before interest rates were adjusted from historically low levels. While this reflects more subdued market performance and more affordable housing conditions across the city, the portion has increased from 30.0% in February of this year, and is up from 12.4% of homes a decade ago.
Adelaide and Perth followed a similar trajectory to Brisbane, with strong value increases since the pandemic creating a sharp increase in the portion of million-dollar plus homes across these cities. Adelaide saw million-dollar homes go from 4.2% of the market in March 2020, to 27.8% of homes in April this year. For Perth, just over a quarter of homes are now $1 million or more, up from 6.0% in March 2020.
Hobart stands out as a city that has seen a reversal of the million-dollar home status, as dwelling values sit 11.1% below a high in March 2022. Between March 2022 and April this year, the portion of dwellings in greater Hobart with a million-dollar plus price tag went from 20.3% to 11.9%. A combination of rapidly rising interest rates, weak population growth trends and relatively weak jobs growth may have contributed to sustained home value declines across the city.
Darwin had the lowest portion of million-dollar homes, at just 1.3% in April 2025. This has been consistent across the city, where 1% of homes were valued at $1 million or more a decade ago. Since strong price rises through the 2000’s infrastructure boom, values have been stagnant across Darwin over time. While certainly the most affordable capital city by value, its remote location and relatively small economy means it is simply not a viable option for many aspiring homeowners.
Why does a $1 million market matter?
Australia’s million-dollar housing markets are in part a reflection of our wealth and prosperity as a nation. After all, housing markets wouldn’t have a million-dollar price tag if at least some Australians couldn’t come up with that level of finance. As values continue to rise, the chance that homeowners hit millionaire status increases, opening up new opportunities for further investment, or accessing that wealth through the sale of a property.
However, the downsides of such an extraordinary price point are also increasingly evident.
The rate of home ownership has gradually declined over time, particularly among younger, low-income households where income cannot keep pace with growth. The average age of first home buyers has increased, and increasingly wealthy households are stuck renting for longer, which increases competition for low income, renting households.
Housing debt has also blown out to keep pace with rising values relative to more subdued wages growth. Housing debt relative to income was recorded by the RBA at 135% at the end of last year (albeit down from a high of 139% before the bulk of cash rate rises in September 2022). This was up from 122% a decade prior.
With values expected to continue rising on the back of rate falls in 2025, the wealth divide between homeowners and non-homeowners is also likely to expand.
Thank you for your ongoing support!
Regards David, Benjamin & the Team at DB Philpott Real Estate
