The Australian property market finds itself at an inflection point in 2025 – balancing between cyclical headwinds and structural shifts that will define its trajectory. While residential property appears set for a period of subdued returns, commercial real estate faces a more fragmented landscape, with industrial assets remaining resilient whilst office and retail continue their search for equilibrium.
The current condition of Australian property markets reflects a disconnect between demand, supply, and affordability, which has persisted for the last two years. Record immigration is driving up demand, but the availability of land is limited, and construction costs are too high, constraining new supply. Further, higher debt costs make this new supply unaffordable for most of the market. This is an unsustainable dynamic.
In our 2025 Property Outlook, we undertake a sector-by-sector analysis of residential and commercial property, detailing the outlook for investors in the year ahead.