📈Housing Market - May 2025 📈

Over the past decade, Australia's housing market has experienced significant growth, making the $1 million price point increasingly common. This is evident with the proportion of dwellings valued at $1 million or more has risen from just below 10% in April 2015 to over 34% a decade later.

Regionally, nearly 20% of homes are valued at $1 million or higher, compared to just 0.5 %a decade ago. In capital cities, nearly 42% of homes now exceed the $1 million mark, up from 14% 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. In Sydney, two-thirds of homes have surpassed the million-dollar threshold. A decade ago, only houses with five or more bedrooms had a median value over $1 million in Greater Sydney. Now, the median value across houses with any number of bedrooms exceeds $1 million, and five-bedroom houses have a median value over $2 million.

However, the trend isn't the same across the country — in Hobart, a significantly smaller percentage have the million-dollar price tag. This may be due to a combination of rapidly rising interest rates, weak population growth trends and relatively weak jobs growth.

The rising property values have implications for housing affordability. The rate of home ownership has gradually declined over time, particularly among younger, low-income households whose income cannot keep pace with growth. The average age of first home buyers has increased, and increasingly wealthy households are renting for longer, which increases competition for low-income renting households.

Independent property economist Cameron Kusher observes that lowering the cost of land would reduce the growth in home prices, due to much of the value lying in the land rather than the dwelling. With land-cost escalation being the key driver of increasing property values, policymakers that are serious about making housing costs cheaper and more sustainable should be doing everything in their power to reducing the cost of residential land and making that land more abundant.

Overall, the data indicates a significant transformation in Australia's housing market, with $1 million no longer guaranteeing access to premium properties, reflecting broader challenges in housing affordability and accessibility.

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Image source: AAP / Darren England