Market watch: Residential, commercial, and FHB trends for agents

Christopher said that there were plenty of signs that the national property market was beginning to heat up.

“It’s certainly not a boom at this point, but there are areas you would have to say are seriously accelerating,” Christopher said at the 2025 Property Investment Professionals of Australia (PIPA) conference.

Kusher noted that many investors were merely following trends without understanding the fundamentals that drove growth in value and strong rental returns.

“We tend to see that everyone follows the herd,” Kusher said.

Christopher said that there were clear signs that a market was about to tip from an opportunity to oversaturated.

“Very strong auction clearance rates may be a sign of an overexuberant market,” Christopher said.

He said prices resting above fair market value were a clear sign that a market was approaching its limit.

“Everything is expensive in the capital cities, but it is expensive for a reason.”

Melbourne

Recently, Christopher said that investors have been looking towards Melbourne due to the city’s slower rate of growth, leaving its property market more accessible.

“It’s an affordability play,” Christopher said

Additionally, he said investors should remember why Melbourne’s growth has been slow compared to other capital cities.

“It’s affordable for a reason right now, because the economy is not in a great place in Victoria.”

Christopher said that while he expects the economy in Melbourne to turn around, he doesn’t anticipate it happening in the short term.

“If you take a 15-20 year longer-term view, I think Melbourne will outperform over that period.”

Adelaide

Kusher said that the market in Adelaide was growing at a steady rate, thanks to low supply, high levels of international migration and lifestyle appeal.

“Adelaide’s still growing at a fairly strong clip,” Kusher said.

“It’s not shooting lights out like it was two or three years ago.”

Kusher warned that investors drawn to properties in smaller capital cities may be limiting their returns by selecting locations outside the major markets.

“You have to question how much more expensive places like Adelaide and Brisbane can get compared to Melbourne.

Perth

Christopher said he was still seeing opportunities for growth in the Perth market, despite the strong growth already seen by the Western Australian capital.

Unlike previous surges in prices, he said the strength of the mining industry didn’t drive the property boom in Perth.

Christopher said that the property trends seen in mining towns like Karratha were typically a good indicator of what the Perth market would look like a few months later.

First home buyers

Kusher believes that the government moved forward the starting date of the wrong scheme, and that the Help to Buy (HTB) shared equity scheme would have been more beneficial for first home buyers than the First Home Guarantee (FHBG) scheme.

“The one that’s actually really going to help people who are struggling to get into the market is the Help to Buy scheme,” Kusher said.

He said the FHG was going to push prices up of properties under the established price caps, creating additional barriers for those entering the market when the HTB scheme finally comes into play.

“When the Help to Buy scheme goes live, it's actually going to make it harder for those people because there's going to be fewer properties for them to buy under those caps, and they are going to be paying more than they would’ve otherwise.”

Kusher said that while the schemes would help first-home buyers enter the market, they do little to address the high prices of Australian property.

O’Neill said that one of the significant concerns being overlooked was the impact of repayments based on the size of the loans.

“There is going to be a lot of people selling out early because cash flow pressures are just so hard,” he said.

Commercial

O’Neill noted that the market was operating at extremes on both ends when it comes to commercial properties, with office values in steep decline while industrial values were running hot.

Additionally, he said that properties at the entry level of commercial, valued under $2 million, were the “hottest” he had ever seen.

“It’s to the point where there is almost a bit of stupidity coming into the market, and you wonder where the values are going.”

With an increase in entry-level investors, he warned that the properties at the lower end were more volatile than their larger counterparts.

He said that the shorter leases typically associated with entry-level commercial assets leave them more vulnerable to vacancy.

According to O’Neill, there has been a surge in residential investors recently, as buyers seek higher yields to support themselves in retirement.

He stressed that having a residential portfolio with an average return would not be enough, and investors would likely find themselves in a stronger position if they sold their properties.

“You’re better off selling the entire portfolio, putting it in the bank and then just getting your interest on it.”

He said it was important for investors seeking a higher yield to enter the commercial property market, but it was not without its risks.

“Commercial is not a home run.”

“You need to invest well, and you need to get lucky,” O’Neill concluded