Interview on the Australian Property Market: House Prices, Interstate Contrasts and Opportunities for Investors

Why Australia is experiencing a severe housing shortage, how government programs to support buyers work, and which states offer the best opportunities for investors. Find out all about this in our interview with Elena Hall, director of HH Realty, who told us about the real state of affairs in the Australian property market in 2025 and its immediate prospects.

Over the past year, many investors have refrained from buying.

On Interest Rates and Housing Affordability

— How has the rise in Reserve Bank of Australia interest rates affected the affordability of housing in the country and buyer activity in the market? Which categories of buyers have suffered the most?

— The interest rate during the COVID-19 pandemic and immediately after it was around 2%. Over the past two years, it has risen to almost 6.5-7% for investment properties.

Because of this, many potential buyers have temporarily refrained from buying property in Australia in the last year, including those who invested in properties with our help every year.

The first-rate cut is expected in March 2025, so we predict a new boom in the market.

— Are there any government programs in the country to support first-time home buyers? What are their features?

— In Australia, there is a special government program called First Home Buyers for those who are buying their first home. The amount of support varies depending on the state. In Victoria and New South Wales, this amount is about 10,000 Australian dollars (AUD), in Queensland — 30,000 AUD (not so long ago 15,000); in South Australia — $15,000, in Western Australia — $10,000.

To qualify for this grant, you must meet certain requirements: you must be a resident (have permanent residence or citizenship); you have never owned property before; the value of the property you are purchasing must be less than AUD 750,000.

Up to 750,000AUDWe can build a house for a client, for example, an hour’s drive from Brisbane. A good one-bedroom apartment costing about $650,000 will be located literally a couple of kilometers from the city center.

Also important and very good news for those who are going to buy a new home: from May 1, 2025, they will have access to a bonus — they will not have to pay tax on the purchase of real estate. There are no restrictions on the price; it is also possible to rent out part of an apartment or house.

There are also separate government support programs for medical workers, for single parents, and programs with a low down payment. So the government really does support different segments of the population when buying real estate. The main thing is to comply with all the requirements.

Over the past 3 years, investors have earned more than in the previous 10 years.

About Property Prices in Different Regions of Australia

— What properties are in demand in the country and why?

— Australians traditionally prefer to live in houses with a plot, while apartments and townhouses are mainly bought by immigrants due to the high level of comfort and developed infrastructure.

Interestingly, the following trend is common among locals: as they approach retirement age, people who lived on the so-called “acridge” (a large plot of land) sell their 6-7-room houses with helipads and hangers for cars and move to the city, buying luxury penthouses.

— What is the current situation with real estate prices in different states, and how much did the same real estate cost a year ago?

— Since I specialize more in Queensland, I can tell you about the situation in this state in detail. The trend is that land has become much more expensive due to preparations for the Olympic Games (to be held in Brisbane in 2032), high inflation, and rising construction costs. Each new project enters the market with a price significantly higher than the previous figures. Over the past 3 years, those who purchased property earlier have earned more than in the previous 10 years.

Currently, you can buy a one-bedroom apartment in a prime area of ​​Brisbane for around £650,000.AUD. Just 1.5–2 years ago, you could buy a two-bedroom apartment for this amount. And this would be an apartment without a parking space, whereas a year ago, for this price, you could count on parking included in the price.

Prices for two-bedroom apartments have increased from $850,000 to $900,000 to $1,200,000. If you buy a property at the foundation stage, you can make a profit of 20–25% on the contract price by the time it is completed in two years.

— The situation in Melbourne is completely different. During the pandemic, a lot of houses were built there with the expectation of selling them, but a situation developed in which the state of Victoria found itself in the most difficult situation — the total duration of the lockdown there was 9 months. Many could not withstand such restrictions and moved to Queensland, where the lockdown was introduced only twice a week and where the climate is more favorable. Many of those who left never returned.

The Victorian market is experiencing a glut of completed projects that are not finding buyers. Prices there are now almost half those in Brisbane. Rental yields are also very low, making these properties unattractive to investors, even in the long term. An additional negative factor has been the introduction of additional taxes on investors by the Victorian government. As a result, many of them are selling their properties in Victoria and transferring their assets to Queensland.

The situation varies significantly between states. Sydney will always be a stable market with a growth trend. In Queensland, prices are gradually approaching Sydney levels. However, there is a significant difference between them: in Queensland, rental yields are about 5% per annum (based on developer guarantees), and property value growth is from 8% to 15% per annum. In Sydney, property values ​​are also growing, but rental yields are 2–2.5 times lower — about 2.5% per annum.

Queensland is becoming an attractive investment destination due to its luxurious climate and developed infrastructure. Interestingly, many Americans choose to retire to Queensland because the Gold Coast reminds them of Miami — a magnificent city with a warm ocean and mild winters.

We are currently expecting interest rates to fall and, as a result, buyers who have been putting off purchasing property due to high interest rates to return to the market.

— How sustainable is the current growth in real estate prices? Are there signs of a “bubble” forming in the market?

— There will definitely not be a property bubble in Australia because there is a severe shortage of supply. As previous experience shows, there was a steady rise in prices during the Sydney Olympics, but prices rose significantly more after the games than before. This was because many people who visited Sydney for the Olympics saw what a great city it was, came back, and bought property there.

I am more than sure that the same will happen to Brisbane, Gold Coast, and other cities. Unfortunately, not many people know how wonderful Australia is with its warm beaches and mild climate. So we expect that the prices will definitely increase before the Olympic Games in Brisbane, and after the games this trend will continue.

Therefore, I do not see any preconditions for the formation of a “bubble” and a subsequent collapse of prices — such a scenario does not threaten us.

Yes, we would like to see an increase in construction volumes, as the current crisis is seriously affecting consumers — it is very difficult to find housing to rent or to buy a finished home. Everyone is forced to wait from one to three years, depending on the property and the stage of construction. Gone are the days when already-built houses were available, and buyers could choose the option they liked during a personal inspection.

So we hope that the country will have the resources to address the acute shortage in the real estate market so that people do not experience such strong pressure when looking for housing.

The most active foreign investors in the Australian market are the Chinese.

About Purchasing Real Estate by Foreigners

— How can a foreigner buy property in Australia? What does the process look like?

— In order to buy real estate in Australia, a foreign citizen must obtain a special purchase permit. It is important to understand that it is issued for a specific property with an exact address and lot number.

Work with foreign investors is structured as follows. First of all, there is a limitation: foreigners can only purchase new housing (new buildings) — this can be a house, an apartment, or a townhouse, but it must be a new property in which no one has lived before.

The first step is to determine the buyer’s budget. The second step is to select a suitable property. Once the property has been identified, the paperwork is submitted for government approval. This process takes about two weeks and costs AUD$14,000 for properties up to AUD$1 million. If the value exceeds AUD$1 million, approval will cost AUD$28,000.

Once permission is received, the contract is signed, then the house is built, and finally, the keys are handed over to the owner.

— Can foreigners take out a mortgage to purchase real estate?

— Yes, foreigners can get a loan to buy property in Australia. There is a certain list of countries (mainly European countries and the USA), the income from which is taken into account when considering the application, and you can get a mortgage without any problems. If you are a student, you can provide guarantees from your parents confirming their ability to make payments. If you are from a country with which there is no agreement on mutual offsets on income, the interest rate will be slightly higher than the standard. These are individual cases, and we have experienced credit brokers who help resolve such issues.

— Residents of which countries are most active in investing in Australian real estate?

— The top 3 countries whose residents invest in Australian real estate are as follows: first place is occupied by China and Asian countries in general (South Korea, Taiwan) — they account for about 80% of foreign buyers. Second place is occupied by the United States, third place by the United Kingdom, and fourth headed to the Netherlands.

The activity of foreign investors remains stable, although there were significantly more of them before the pandemic. Chinese developers were especially active, building many properties here and selling about 80% of apartments directly to the Chinese.

During the pandemic, there was a major crisis when China banned the transfer of money out of the country. The situation was that houses were built, but buyers could not take possession of the property because they could not transfer the money. This had a significant impact on the market. We had to resell these properties, and local buyers were very happy to be able to buy finished apartments at a bargain price. After the pandemic, many made extremely good purchases, such as gift cards, discounts of up to $25,000, and many other bonuses were offered.

After that, the legislation changed, and now in each residential complex, no more than 20% of the total number of housing units can be sold to foreign investors. When a new property enters the market, local buyers are given priority, and only after 3–4 months, when a certain sales threshold has been exceeded, are sales to foreign buyers permitted.

Despite these restrictions, foreigners continue to invest, as the market remains stable and investment returns are high.

We are now on the verge of lowering interest rates.

About Rent and Investments

— How have rental rates changed in recent years, and what might this mean for real estate investors?

— Rental rates have increased significantly in recent years. Many investors, in order to preserve their investment portfolio and avoid selling their property, have switched to a scheme of paying only the interest on the loan, without repaying the principal. This significantly reduces monthly payments and is a fairly effective strategy. When investing in real estate, time works for you — the longer you hold onto your investment, despite all the market fluctuations, the better the result in the long term.

We are now on the verge of lower interest rates. For investors, this means increased profits, as well as the opportunity to use the increased value of real estate for further investments.

In Australia, there is a special financial instrument called equity. For example, if you bought a property for $500,000 and its value increased by $200,000 in a year, then the difference between the contract price (for which you took out a loan) and the current market price is $200,000. You can use this difference for further investment. This is one of the instruments that helps expand your real estate investment portfolio.

This way, you can use your current property to invest in future properties without using your own savings. Not many countries in the world provide the opportunity to use such a tool. In addition, Australia has a depreciation system that can be written off for tax purposes. Overall, Australia has created very favorable conditions for creating an effective real estate investment portfolio.