Buying property in a recovering market: what you need to know

11/07/2025

Australia’s housing market appears to be on the move. After a challenging time marked by falling prices, stretched affordability, and rapid interest rate hikes, we saw a flatter period where interest rates were on hold, but housing growth also appeared to be on hold – or at least constrained. Now it seems the cycle has turned.

We’re now seeing the early stages of a broad-based recovery. For buyers, this presents an opportunity to buy under more balanced conditions. But it also requires a clear understanding of how the market has changed, and how to prepare for what’s ahead.

The market is recovering – but not all at once

The Australian property market is not one single market moving in unison, but rather a network of interconnected markets – by city, suburb, housing type, and price point- each with its own momentum and stage in the cycle.

That said, the current recovery is notable for its breadth. CoreLogic data and other housing indicators show that growth is no longer isolated to just a few high-performing areas. Instead, we’re seeing value increases across most capital cities and regional markets, including those that previously lagged during the boom years.ⁱ

During the past two years, price growth was concentrated in more affordable regions – cities like Adelaide and Perth, and regional areas where lower median prices attracted price-conscious buyers and investors. These markets led the nation as higher-rate environments forced buyers to seek out value.ⁱⁱ

Now, as interest rates begin to soften, we’re seeing the dynamic shift again. Buyers are returning to markets that had previously stalled, including Sydney, Melbourne, and some eastern regional hubs, where prices have become relatively more affordable in comparison to income and borrowing capacity. This shift is helping to fuel a broader, more geographically diverse recovery.ⁱⁱⁱ

Understanding the property cycle

To make sense of where we are now, it helps to look at the bigger picture. The property market typically moves in four broad phases: boom, downturn, stabilisation and recovery (see market cycles diagram).

The cycle doesn’t move evenly everywhere, and different markets may transition through these phases at different times. But today, the key trend is that most markets – both in capital cities and regional areas – are moving in the same direction: upward.

What’s driving the recovery?

A combination of economic, demographic, and supply-side factors is contributing to the current recovery.

The most immediate catalyst is the shift in monetary policy. The RBA’s rate cut in February 2025 was the first since the pandemic, and it signalled the beginning of a more dovish approach after 13 rate hikes between May 2022 and November 2023. This change has begun to ease pressure on household budgets and slightly improve borrowing capacity – both of which are boosting buyer confidence.

At the same time, there is a significant housing undersupply. New dwelling approvals and construction starts have fallen to multi-decade lows, while population growth – driven by migration and natural increase – continues to rise. This mismatch between supply and demand is placing upward pressure on prices, particularly in areas with strong employment and lifestyle appeal.^iv

According to CoreLogic, the combined impact of improved affordability (relative to peak prices), more accessible credit, and low housing stock is supporting a sustained, broad-based recovery across most market segments.

What it means for buyers

Buying in a recovering market isn’t about trying to “time the bottom”. It’s about recognising the shift in sentiment and fundamentals – and making a move while conditions are still relatively favourable.

Prices are rising again, but they haven’t yet reached new peaks in most locations. That presents an opportunity for well-prepared buyers to secure a property before competition intensifies. With the rate cycle turning, some would-be buyers who had been holding off are now re-entering the market, particularly in cities where values have corrected and affordability has improved relative to local incomes.

There’s also a renewed focus on quality and liveability. After years of buyers chasing affordability, we’re now seeing demand flow back into more established urban markets – inner-city apartments, family homes in middle-ring suburbs, and lifestyle-focused coastal towns.^v These areas are benefiting from improved relative value and long-term growth potential.

How to prepare for a purchase in a recovering market

If you’re thinking about buying, preparation is critical – especially as competition increases.

The first step is understanding your financial position. This includes reviewing your income, expenses, savings, and potential loan options as a full assessment of your borrowing capacity is the best way to know what you can afford.

Next, obtaining pre-approval is essential. It allows you to move quickly when you find the right property and shows sellers that you’re a serious buyer. Pre-approval can also help you stay within budget and avoid overextending yourself in a rising market.

Research is also key. With growth becoming more broad-based, it’s important to evaluate different areas carefully. Consider factors like local infrastructure and transport, rental demand, school catchments, employment trends, and long-term development plans.

And finally, be realistic about timing. Recovery phases can move faster than expected. If you find a property that meets your needs and aligns with your financial goals, being in a position to act quickly could make all the difference.

Being ready means more than just watching listings – it means knowing your numbers, understanding the cycle, and getting expert advice to guide your next steps.