Australian Property Market Update January 2026

0:00I want you to try and do something for

0:01me just for a second. Try to visualize a

0:04number. 122.3 trillion dollar.

0:08It’s a figure that

0:10it almost doesn’t sound real when you

0:12say it out loud.

0:13It’s like something from astronomy, not

0:15economics,

0:16right? It sounds like the distance to

0:17the next galaxy. But that is the current

0:20estimated value of the Australian

0:21residential real estate market as of

0:23this month, January 2026. 12.3 trillion.

0:28H

0:29and I feel like we just throw the words

0:31billion and trillion around so loosely

0:33these days that we’ve we’ve become numb

0:36to what that actually means.

0:37We definitely have to, you know, to

0:39ground that for everyone listening and

0:41this is a comparison I love because it

0:42really shows the scale.

0:43Yeah.

0:44If you took every single dollar in the

0:45Australian superanuation system,

0:47Mhm.

0:47everyone’s retirement nest egg combined,

0:49that’s about $4.5 trillion,

0:51right? So housing is nearly triple the

0:53size of our entire retirement savings

0:55system. And if you went to the ASX and

0:57liquidated every single company listed

0:59on the Australian stock exchange, I mean

1:02the big banks, the miners, the

1:03supermarkets, all of it.

1:05All of it.

1:05That’s only about 3.6 trillion.

1:07That is wild. So you could combine the

1:09entire Australian stock market and

1:11everyone’s superanuation and you are

1:13still trillions of dollars short of the

1:15value of our houses.

1:16Which really drives home why housing

1:18isn’t just a market in Australia. It

1:20effectively is the economy. The data

1:22we’re looking at today shows that 55.4%

1:26of household wealth is held in housing.

1:29It is the absolute gravitational center

1:32of the nation’s finances. I mean, if

1:34housing sneezes, the whole country

1:36catches a cold.

1:37Which brings us to our mission for this

1:39deep dive. We are unpacking the totality

1:42monthly housing chart pack for January

1:442026.

1:46And the timing, it feels huge. We’ve

1:49just come off this absolute tear in

1:502025. But looking at these charts, I’m

1:53getting the distinct sense that the

1:54ground is shifting beneath our feet.

1:56It definitely is. The headline numbers

1:58still look massive, but when you peel

1:59back the layers, you know, there are

2:01cracks appearing in the foundation.

2:03We’re essentially trying to answer one

2:04big question today,

2:05which is

2:06after a historic run, has the Australian

2:09property market finally hit a wall?

2:11Well, let’s start with that historic

2:12run. Because if you just looked at the

2:15annual figure on the front page of this

2:16report, you’d be popping the champagne.

2:19You’d think the party was still raging.

2:20Oh, absolutely. If you only look at the

2:22rearview mirror, 2025 was a powerhouse

2:25year nationally, home values shot up

2:278.6%.

2:29Which, for context, isn’t just good,

2:32right? That’s that’s significantly above

2:35the long-term average.

2:36It’s historically significant. If you

2:39rank every calendar year for the last

2:42four decades, 2025 is in the top 15. We

2:46saw this broad-based lift where every

2:48single capital city and every regional

2:50area ended the year in the green.

2:52A synchronized upswing.

2:54Exactly.

2:54Right. So that’s the Instagram version

2:56of the market. Everything looks perfect,

2:58but you and I are looking at the monthly

3:00breakdown and the end of the year tells

3:01a completely different story. It looks

3:03like the engine started sputtering in

3:04Q4.

3:05That is where the nuance is. That’s the

3:07two-speed scenario emerging. Yes,

3:09quarterly growth was still positive at

3:102.9%. But the monthly momentum is

3:13clearly fading. And the big story here,

3:16the one that should make people sit up

3:18and take notice is the heavyweights.

3:21Sydney and Melbourne, they’re not just

3:23slowing down, they’re sliding backward.

3:25I saw that in the December data. Sydney

3:28values dropped what? 0.1%.

3:31And Melbourne took a real hit, down 0.9%

3:35in a single month.

3:36And you have to understand, those two

3:37cities usually dictate the national

3:39headline. When Melbourne drops nearly a

3:42full percent in a single month, that’s a

3:44sharp correction. It’s not just

3:45statistical noise.

3:46Yeah, that’s a real move.

3:47And it correlates perfectly with the dip

3:49in consumer sentiment we saw in

3:51December.

3:52It makes sense. We spent all of 2025

3:54hoping the RBA, the Reserve Bank, would

3:56cut interest rates. It was the carrot

3:58dangling in front of us. But by

4:00December, I think reality set in that

4:03inflation is sticky

4:04and those rate cuts aren’t coming.

4:05The optimism just evaporated. But here’s

4:07the part that complicates the narrative.

4:09If Sydney and Melbourne, which are the

4:11biggest markets, are hitting a wall, why

4:13is the national growth figure still so

4:15high? Why isn’t the whole chart turning

4:17red?

4:17Because the Australian market has

4:18fragmented. It’s shattered into

4:21different realities. It seems like the

4:23driving force now is purely

4:25affordability,

4:26right?

4:26While the expensive cities are hitting a

4:28ceiling, the more affordable markets are

4:30absolutely exploding. I mean, look at

4:32Darwin.

4:33Darwin is the absolute outlier of the

4:36year. It’s incredible. 18.9%.

4:38An 18.9% lift in values over the year.

4:42And it’s not just there. Brisbane,

4:44Adelaide, Perth, they’re all sitting at

4:46record highs right now.

4:47And that tells you everything about

4:49buyer behavior. This is essentially a

4:52capital migration. It’s an affordability

4:54spillover. The top end of the market,

4:57the most expensive cortile in Sydney or

4:59Melbourne, that’s where the weakness is.

5:01Okay?

5:02People simply cannot borrow enough money

5:04to buy there anymore. The bank says no.

5:06So that demand doesn’t disappear, it

5:07cascades down.

5:08It flows to where the money goes

5:10further.

5:10If I can’t afford a $1.5 million shack

5:13in Sydney, I take my money to Brisbane

5:15or Darwin or I buy a cheaper unit.

5:17Precisely. And that also explains the

5:20regional story because looking at this,

5:22regional Australia actually outperformed

5:25the capital cities

5:27by a wide margin. Combined regional

5:29values were up 11.1%

5:32compared to 8.2 for the capitals. Again,

5:35it’s the search for value.

5:37If you can work remotely or if you just

5:39want a smaller mortgage, the regions are

5:41still offering a price point that the

5:43big cities can’t touch.

5:44So, we have this dynamic where the

5:46expensive stock is stalling because

5:48nobody can afford it and the cheaper

5:50stock is booming because everyone is

5:52fighting over it. It’s a tale of two

5:54markets.

5:54Okay, so we’ve established that demand

5:56is shifting, but I want to look at the

5:57supply side because usually when

6:00interest rates are this high, we’re

6:01sitting at a 3.6% 6% cash rate, you

6:04expect the market to freeze up,

6:06right? You expect buyers to go into

6:08hibernation.

6:08But looking at the transaction numbers,

6:10people are still buying.

6:11They are buying in droves. Total sales

6:14for the year topped 560,000.

6:17That’s a 4.9% increase in volume

6:20compared to the previous year.

6:21So, high rates haven’t killed the buyer.

6:23Not yet. But here’s the catch, and this

6:26is probably the most uh dangerous chart

6:29in the pack. It’s what we might call the

6:31inventory crisis.

6:32This is the listings count. I was

6:33looking at this and thinking this feels

6:35like a supermarket just before a

6:36hurricane.

6:37That’s a great analogy. If you’re a

6:39buyer right now, you are walking into a

6:41store that is 20% empty. Total listings,

6:45everything available for sale across the

6:47country are down 20.6% compared to the

6:505-year average.

6:51That is a massive deficit. One out of

6:53every five for sale signs that should be

6:56there just isn’t.

6:57It’s huge. And frankly, it’s not getting

6:59replenished. New listings in December

7:01were down 5% against the average. So you

7:04have this pressure cooker.

7:05Even though demand might be softening a

7:07little bit in Sydney and Melbourne

7:10because of the rates, there is so little

7:12stock available that it puts a hard

7:14floor under prices.

7:15It prevents a crash because for prices

7:17to crash, you usually need a flood of

7:18panic selling. Right.

7:19Exactly. A crash usually requires a

7:22flood of distressed selling people

7:25forced to sell their homes because they

7:26can’t pay the mortgage. We aren’t seeing

7:28that. Instead, we see people holding on

7:30for dear life and very few new sellers

7:33coming to market,

7:34which keeps the power firmly with the

7:36sellers. I was looking at the days on

7:38market metric. Basically, how long it

7:39takes to sell a house. In the capital

7:41cities, the median time is just 24 days.

7:44That is blistering speed.

7:46It’s faster than a year ago.

7:48It is. Think about that contradiction.

7:50Sydney prices are dipping slightly, yet

7:52houses are selling faster than they were

7:54last year. It tells you that anything

7:56that is priced correctly is being

7:58absorbed instantly.

7:59Let’s talk about that term absorption

8:01because we see it in the reports.

8:03Think of it as the market’s metabolism.

8:05You know, how quickly does it digest the

8:07new stock? Right now, the absorption

8:09rate is incredibly high. The market is

8:11hungry. There just isn’t enough food on

8:12the table. Now, if the buyers are

8:14struggling to find a house, the people

8:16who aren’t buying the tenants are in a

8:18full-blown crisis, and I don’t use that

8:21word lightly, but looking at the rental

8:23charts, crisis feels appropriate.

8:26It is grim reading for renters. There’s

8:28no other way to put it. The national

8:30rental index was up another 5.2% in

8:342025.

8:35And on top of the huge growth the year

8:37before, so it’s compounding pain. And

8:39the vacancy rate tightened again in

8:41December to 1.7%. That is incredibly

8:44tight. And if you look at specific

8:46pockets like regional Western Australia,

8:49rents jumped over 10%.

8:51Wow.

8:52There is simply nowhere to go.

8:53And this leads us to what I think is the

8:55most fascinating and perhaps baffling

8:57part of this report, the investor

8:58paradox.

8:59This is where the logic gets twisted.

9:01Okay, walk me through this. I’m looking

9:02at the gross rental yields. This is

9:04basically the return on investment you

9:06get from rent before you pay any costs,

9:08right? And because property prices rose

9:10so much faster than rents in 2025, that

9:13yield percentage has been crushed. It’s

9:15down to 3.56%.

9:17That is the lowest level since September

9:192022. We call this yield compression.

9:22Okay? So 3.56% gross once you pay the

9:27agents management fees, the maintenance,

9:29the council rates, the insurance,

9:32you’re netting what? Peanuts. Probably

9:35less than 2%

9:36in many cases. Yes. Yeah.

9:38And certainly less than the interest

9:39rate you were paying on the mortgage.

9:41Meanwhile, you can put cash in a term

9:43deposit or a high interest savings

9:44account and get what? 4% risk-free.

9:48Close to it without the hassle of fixing

9:50a leaking toilet at midnight.

9:51So, rationally, investors should be

9:53fleeing real estate. The math doesn’t

9:55work, but the chart says the opposite.

9:57They’re stampeding back in. Investor

10:00lending volume was up 13.6% in the

10:02September quarter.

10:03Investors now make up 41% of all

10:05mortgage activity. Why make it make

10:07sense? Why buy an asset that costs you

10:10money to hold every single month?

10:11It’s the bet on capital growth. It’s the

10:14Australian property religion. Investors

10:16looked at that 8.6% growth in 2025. And

10:20they did the mental math. They said, “I

10:22don’t care if the rent doesn’t cover the

10:24mortgage. I don’t care if I’m losing

10:26$500 a month in cash flow.

10:28If the asset goes up by eight or 10%,

10:31I’m making tens of thousands of dollars

10:34in equity.” They are subsidizing the

10:36tenant to hold the lottery ticket.

10:38Essentially, they’re negatively gearing,

10:41taking the tax break, and betting the

10:43farm that prices will keep rising

10:44forever. They are ignoring the yield

10:47because they are chasing the growth.

10:49But that feels like a massive gamble

10:50right now. We just established that

10:52Sydney and Melbourne, the biggest

10:54markets, are sliding into negative

10:56territory.

10:57Exactly. If you buy a rental property in

10:59Melbourne today yielding 3.5% and the

11:02value drops 1% next year,

11:04you’re losing on both sides. You’re

11:06losing cash flow and equity.

11:08That is a trap. It’s a high stakes

11:10calculation. You are paying for the

11:12privilege of holding the asset. If the

11:14market goes flat, that calculation

11:16breaks. If the market drops, it gets

11:18ugly very quickly.

11:19And there are headwinds that suggest

11:21flat might be the best case scenario. We

11:23need to talk about the money, the debt

11:26itself. We are sitting on $2.5 trillion

11:30in outstanding mortgage debt across the

11:32nation.

11:32And the price of servicing that debt

11:34isn’t coming down. The RBA held a cash

11:37rate at 3.60%

11:40at their last meeting of 2025.

11:42And they weren’t exactly whispering

11:43sweet nothings about rate cuts, were

11:45they?

11:46No. The tone was distinctly hawkish.

11:48They’re worried. Core inflation was

11:50still at 3.2% in November. The RBA’s

11:53target is 2 to 3%. Until that number

11:55drops, rates stay high.

11:57So, the cavalry isn’t coming.

11:59Not anytime soon. But there’s a silent

12:01killer in this report that I think fewer

12:03people are talking about. It’s not just

12:04the cost of money. It’s the access to

12:06money.

12:06This is APR.

12:07This is AP. The Australian Credential

12:09Regulation Authority, the banking

12:11police. They have watched this investor

12:14surge. They’ve seen the high leverage

12:15and they are stepping in. New

12:17macrocredential policies kick in next

12:19month, February 2026.

12:21We’ve heard about this in the news. They

12:22are targeting high debt to income

12:24lending.

12:26Can we strip the jargon? What does that

12:28actually mean for someone trying to get

12:30a loan?

12:31Sure. So debt to income or DTI is a

12:34simple ratio. If you earn 100,000 a year

12:37and you owe 600,000, your DTI is six.

12:41Okay.

12:41APR is effectively telling the banks you

12:44are lending too much money to people who

12:46already have too much debt

12:48because the charts show that risky

12:49lending is ticking up. It is high loaned

12:51income lending hit 3.3%.

12:54And interestonly lending, which is the

12:57favorite tool of the investor because it

12:59keeps monthly payments low, has risen to

13:01nearly 21% of all loans.

13:03That’s a fifth of the market, not paying

13:05down a cent of the actual loan

13:07principle. They’re just renting the

13:08money.

13:09Exactly. It’s purely a speculative bet.

13:11So APR is tightening the screws. They’re

13:13capping how many of these high lever

13:15loans banks can write.

13:17So connect the dots for me. We have

13:19investors rushing in to buy, hoping for

13:20capital growth. But the regulator is

13:22about to turn off the tap for the people

13:23who are stretched the thinnest,

13:25which is likely those same investors,

13:27right?

13:27Which is exactly why we’re seeing the

13:29slowdown in the expensive markets.

13:31You can only stretch a household budget

13:33so far. You can only leverage an income

13:35so many times. We are hitting the

13:37theoretical limit of borrowing capacity.

13:39It feels like the market is tired.

13:42Exhausted might be the word. It sprinted

13:44a marathon in 2025. 8.6% 6% growth is a

13:48sprint, but now it’s 2026. The runner’s

13:51panting. Interest rates are the heavy

13:53backpack they can’t take off.

13:55And the referee AP is changing the rules

13:58mid race to make it harder. That’s a

14:00vivid image.

14:01So, let’s try to synthesize all of this

14:03for the listener because we’ve covered a

14:05lot of ground from the $12 trillion

14:07valuation to the rental crisis in

14:09regional WA to the banking police

14:11stepping in.

14:12Well, let’s look at the chessboard. On

14:13one side, you have the forces of growth.

14:16incredible demand, a massive shortage of

14:18listings, the 20% hole in the shelf,

14:20and a migration of wealth into cheaper

14:22markets like Darwin and Brisbane, the

14:25supply cliff is basically holding the

14:26whole thing up.

14:27It is the only thing preventing a

14:29correction in prices.

14:30But on the other side of the board, the

14:32opposing forces are getting stronger.

14:34Affordability is maxed out, lenders are

14:36tightening standards, yields are

14:38terrible, and inflation is forcing the

14:41RBA to keep rates high. And caught in

14:44the middle are these investors. 41% of

14:48the market activity.

14:49That’s the group I’m watching. That is

14:50the variable

14:51because they’re the most leveraged

14:53because they are the most sensitive to

14:54sentiment. A homeowner will eat beans on

14:57toast to keep their family home. They

14:59won’t sell unless they absolutely have

15:00to. But an investor,

15:03if the capital growth stops, if Sydney

15:06stays flat or drops another 2% and

15:09they’re bleeding cash every month on the

15:11mortgage,

15:12the math stops working.

15:13And if they decide to rush for the exit,

15:15that low inventory problem we talked

15:17about could solve itself very quickly.

15:19That is the tipping point.

15:20Yeah.

15:20If investors turn from buyers into

15:22sellers, that supply deficit disappears

15:25and price discovery becomes very real.

15:27So, what’s the final takeaway? What’s

15:28the one thing you want the listener to

15:30mle over?

15:31Caution.

15:322025 was the party. 2026 is the

15:35hangover.

15:36The market isn’t crashing right now, but

15:37it is fragmenting. If you’re looking at

15:40property, don’t look at the Australian

15:42market. It doesn’t exist, right?

15:44Look at the specific street, the

15:45specific yield, and ask yourself one

15:47hard question.

15:49If this property doesn’t go up in value

15:51for three years, can I afford to hold

15:53it? Because for a lot of people buying

15:55right now relying on that capital

15:56growth, the answer is no.

15:58That is a sobering thought to end on. If

16:00the growth stops, the leverage breaks.

16:03We will be watching those February

16:04numbers very closely to see what APR’s

16:07new rules actually do to the lending

16:10data.

16:10It’s going to be interesting few months.

16:11Thanks for taking the plunge with us on

16:13this deep dive. Make sure you check out

16:15the full chart pack if you want to see

16:16the madness for yourself. We’ll see you

0:00Welcome back to the deep dive. Today we

0:02really have to talk about what I’m

0:04calling the 2025 paradox

0:07because if you look back at the last 12

0:09months in Australian real estate, the

0:11numbers, well, they just don’t seem to

0:14add up.

0:15It really was the year that broke the

0:16economic textbooks, wasn’t it?

0:17Completely. Because if you rewind to the

0:20start of last year, the story was so

0:22simple. Everyone, and I mean everyone,

0:25was saying just wait for the interest

0:26rate drops. affordability is finally

0:29going to improve.

0:30That was the promise. That was the hope.

0:31Yeah.

0:32And you know, on paper, the conditions

0:34were perfect. We finally got that

0:36relief. The Reserve Bank cut the cash

0:38rate three separate times in 2025.

0:41February, May, and August.

0:42Yep. Bringing it down by 75 basis points

0:45all the way to 3.60%.

0:46Which is a significant chunk of change.

0:48That’s real money back in the pocket for

0:49anyone with a mortgage.

0:50It is. But here’s the paradox, and this

0:53is really the core of our deep dive

0:55today.

0:56Despite those three cuts, despite money

0:59getting cheaper,

1:00housing affordability actually got worse

1:02for a huge number of people.

1:04It feels completely counterintuitive.

1:06And that’s what we’re digging into.

1:07We’ve got the Herren Todd White month in

1:09review for December 2025.

1:11The big one.

1:12The big one. This is the definitive

1:14report card for the whole year. And our

1:16mission is to figure out how the market

1:19defied all expectations. why that gap

1:22between the halves and the haveotss is

1:24just turning into a canyon.

1:26And we’re gonna look at some specific

1:28wild examples from record-breaking

1:30mansions to um some really devastating

1:34losses in the unit market that just

1:37prove a rising tide does not lift all

1:39boats.

1:39That is the key takeaway. It’s not one

1:41market anymore. It’s a story of extreme

1:43fragmentation.

1:44Okay, so let’s start at the top, the big

1:46picture. The report puts a number on the

1:48year. National dwelling values finished

1:512025 at least 8% higher.

1:53And honestly, that feels conservative.

1:55To give you some context on the

1:56momentum, the market has now recorded 11

1:59straight quarters of growth.

2:0011 quarters. That’s almost three years

2:02of non-stop increases.

2:03It is. But the stat that really, you

2:05know, hits you psychologically is the

2:07price floor.

2:08The million-doll club.

2:09Exactly. Five out of our seven capital

2:11cities now have a median house price

2:14over a million dollars.

2:16Wow.

2:16That used to be a luxury benchmark. Now,

2:18it’s just the entry fee for a standard

2:20house in most of our big cities.

2:22So, walk me through the mechanics of

2:24this. We get the three rate cuts. Why

2:26didn’t that help the average buyer? Why

2:28did prices just accelerate away from

2:30people?

2:31It’s all about behavioral economics. The

2:33rate cuts acted as an immediate

2:35stimulus, you suddenly have more

2:36borrowing power,

2:37right? But because everyone had more

2:39borrowing power at the same time and

2:42because sentiment just flipped overnight

2:44from wait and see to fear of missing

2:46out,

2:47all that extra money just flooded into

2:48asset price.

2:49Precisely. Any savings you made on the

2:52interest rate were immediately eaten up

2:54by the higher purchase price.

2:55You’re running faster just to stand

2:56still.

2:57You are, but there’s a structural

2:58arsonist just pouring fuel on this fire.

3:02And it’s not the banks, it’s supply. We

3:04talk about supply all the time, but this

3:06report suggests 2025 was particularly

3:09bad.

3:09It was a perfect storm. Approvals are

3:11sitting at decade lows. The construction

3:13industry is falling way behind those

3:15national housing accords.

3:17Yep.

3:17We simply are not building enough homes.

3:19And at the same time,

3:20the population is surging.

3:22The report specifically calls out high

3:24net interstate migration. Yeah.

3:26Especially into WA and Queensland.

3:28So, a classic supply and demand train

3:30wreck,

3:31but with a government policy twist. You

3:33have to look at the expansion of the

3:34first home buyer guarantee scheme on

3:37October 1st.

3:38That’s the one that lets you buy with a

3:39tiny deposit, right?

3:40Yeah. And the uptake was massive. In

3:43October alone, one in 10 homes bought in

3:46Australia use that scheme.

3:48One in 10.

3:49It’s huge market penetration. But think

3:52about what that does in a market with no

3:53stock.

3:54It just concentrates all the demand in

3:56one spot.

3:56Exactly. It funnels this huge wave of

3:59demand into a very specific quote

4:01unquote affordable price bracket.

4:04So the lower end of the market where

4:05first home buyers are looking actually

4:07saw prices accelerate the fastest.

4:09So the government hands you a ladder but

4:11because they gave one to everybody else

4:13the wall just got 10% higher.

4:15That is a very very good way to put it.

4:17It’s a classic demand side solution

4:19hitting a supply side brick wall.

4:21Okay, that’s the residential picture.

4:23But I want to pivot to the sector that I

4:25think tells us more about the real

4:26economy. Commercial offices.

4:29Ah yes, this is where we have to

4:32introduce the word of the year.

4:33Bifurcation.

4:35A fancy way of saying the market

4:36splitting in two. Winners and losers.

4:39That’s it. If you just look at the

4:41headline number, it looks terrible.

4:44National CBD office vacancy rose to

4:46around 15.2%.

4:48That’s a lot of empty desks. That’s

4:50basically one in every seven floors

4:52sitting empty.

4:53But it’s not spread evenly. And this is

4:55the key insight. The report talks about

4:58an aggressive flight to quality. Tenants

5:00are demanding prime energy efficient

5:03amenity richch space.

5:04This is the whole earn the commute idea,

5:06isn’t it? If you’re going to make people

5:07come back to the office, it has to be

5:08better than their home office.

5:10That’s the logic. Hybrid work is bedded

5:12down now. Companies know what they need.

5:14They want less space, but they want

5:15better space. the five-star green

5:17rating, the fancy end of trip

5:19facilities. So those premium buildings

5:21are doing fine, but the secondary stock,

5:24the older C-grade ugly buildings, they

5:27are really, really suffering.

5:28And there are some fascinating

5:29differences between cities here.

5:31Brisbane really stood out in the report.

5:33Brisbane is the total outlier,

5:36specifically in that sub10 million owner

5:39occupier market. The report calls it

5:42exceptional.

5:43Values up 10 to 25%. That’s a huge jump

5:46for commercial.

5:46It is. It’s psychology. Small business

5:49owners in Brisbane are just saying, “I’m

5:50done with landlords. They want

5:51certainty.” So, they’re buying their own

5:53premises. And it’s incredibly

5:54competitive.

5:55Whereas in Sydney, it’s the complete

5:57opposite,

5:57a total flip. In Sydney, it is a tenants

6:00market through and through. Vacancy is

6:02high. Landlords are throwing massive

6:04incentives, free rent, free fitouts just

6:06to get a signature on a lease.

6:08A tale of two cities. Landlord is king

6:10in residential. Tenant is king in the

6:12Sydney CBD.

6:13That’s it. Context is everything.

6:15Let’s get back to residential then,

6:16specifically Sydney, because the numbers

6:18here are just mind-boggling. The report

6:20calls it a tale of two markets.

6:22It really is. I mean, overall, Sydney

6:24dwelling values are up about 5.2%.

6:26Which is strong, but the real story is

6:29in the extremes. The prestige explosion.

6:32I love reading these. It feels like a

6:34different planet.

6:34It basically is. The ultra wealthy are

6:37operating in a totally separate economy.

6:39Take the record sale in Castle Hill, 32

6:41Pioneer Place,

6:429.0 025

6:45million for a house in the Hills

6:47district, not on the harbor.

6:49A record for a non-development site. But

6:52look at what you get. 2,000 square meter

6:54block, eight bedrooms, 10 bathrooms.

6:5610 bathrooms. Why?

6:57A sevencar garage, infinity pool, Wolf

7:01appliances. It’s pure lifestyle.

7:03And that wasn’t even the biggest. 14

7:05Tivy Avenue in Rose Bay went for 82.5

7:07million.

7:0782 million.

7:08And another one in Mosman, 3 Kirkwald

7:10Avenue sold for 50 million. And that

7:12Mosman one was on the market for less

7:14than a week.

7:14Less than a week. It just tells you

7:16there is so much money at the top end

7:18waiting for the right asset. Even the

7:19Baz Lurman house finally sold for 37.5

7:22million.

7:23Although I did notice it sold after a

7:25price cut from 40 million. So even Baz

7:27has a budget.

7:28Even Baz has to negotiate.

7:30Okay.

7:30But and this is where we have to get

7:32serious for a moment. Not everything in

7:34Sydney made money. In fact, you can lose

7:37a fortune in a booming market.

7:39Okay, this is the Blacktown example.

7:40This one really stuck with me. It just

7:42challenges that whole safest houses

7:43idea.

7:44This is the cautionary tale of the year.

7:46Unit 303 at 43 Devon Street, Blacktown.

7:50It sold in August 2025 for $400,000.

7:54Okay. On the surface, that sounds like

7:56affordable housing.

7:57But then you look at the sales history.

7:58It was bought off the plan in 2015 for

8:01$421,950.

8:04So just on paper, they lost nearly 22

8:06grand over 10 years.

8:08Right. And that’s before you would

8:09adjust for inflation.

8:10Yeah. If you factor in holding costs,

8:12strata fees, the opportunity cost of

8:14what that money could have earned

8:15elsewhere.

8:16Yeah.

8:16That investor likely lost over $150,000

8:19in real terms

8:19during one of the biggest property booms

8:21in history. That is just brutal.

8:23It’s the ultimate example of high supply

8:25unit markets versus land. We said

8:27scarcity drives prices. Well, in these

8:29highdensity areas, there’s no scarcity

8:32of generic two-bedroom units. They’re

8:33everywhere.

8:34The lesson is it’s not just where you

8:36buy, it’s what land appreciates. A

8:39generic box in the sky can depreciate.

8:41That’s the rule of thumb. Although, if

8:43we head down to Melbourne, we see the

8:46unit market behaving very differently,

8:48but for a very specific reason.

8:50Melbourne was the surprise of the year,

8:51wasn’t it? Everyone was writing it off.

8:53They were predictions were for a fall.

8:55Instead, the report says it showed

8:56surprising resilience. And it was driven

8:58by a two-tiered market, all based on

9:01affordability.

9:02And the investors came back.

9:03Yes, investors returned, but they

9:05weren’t chasing capital growth like in

9:07Sydney. They were chasing yield. Yeah.

9:09They went to the affordable suburbs.

9:10Search volumes for places like

9:12Campbellfield and Dallas just

9:14skyrocketed.

9:15By how much?

9:16We’re talking 94% and 106% increases in

9:19search activity. And it worked. Dallas

9:21units were up 11.5%.

9:23Wow.

9:24But the really fascinating trend in

9:25Melbourne is what’s happening in the

9:27CBD.

9:27The three-bedroom trend.

9:28This is a major lifestyle shift. For

9:31years, the Melbourne CBD was flooded

9:32with tiny student apartments. But in

9:352025, while the small unit struggled,

9:37three-bedroom CVD units surged 14.1%.

9:4114%. That’s a huge jump. Over $155,000

9:46in value in one year.

9:47It signals a real shift to luxury

9:50apartment living.

9:52It’s downsizers. It’s families who want

9:54a city lifestyle, but not in a shoe box.

9:56It’s a very European way of living.

9:58It is. And crucially, the supply of new

10:01apartments is at its lowest point since

10:032008. So you have a scarcity of the

10:06right kind of apartment. Plenty of dog

10:08boxes, but very few family-sized homes

10:11in the sky.

10:11So again, it all comes back to scarcity.

10:13Always.

10:14I want to do a quick tour of the regions

10:16because the report always finds these

10:17little pockets of strange behavior.

10:20Let’s start with Alre Wonga.

10:21This is the story of the blind investor

10:23buying sight unseen.

10:25A total frenzy. You have out of town

10:26investors, mainly from the Capitals,

10:28buying properties just from virtual

10:29inspections. And the local agents are

10:31actually raising the alarm.

10:33Really?

10:33Yeah. They’re warning that these

10:34investors are paying way over the odds

10:36for lower quality stock just to get a

10:39foot in the door.

10:40That sounds incredibly risky. You can’t

10:42smell the damp over a Zoom call.

10:44You can’t. And the risk is they’re

10:46buying maintenance nightmares that

10:47locals wouldn’t touch. It’s pure FOMO.

10:50Okay. What about the Northern Rivers?

10:53Lismore Casino. The report used a movie

10:56analogy here that I loved.

10:57Chuckles. Yes. The valuer there compared

11:00the market to the movie tenant.

11:02The Christopher Nolan one where time

11:04runs backwards and it makes no sense.

11:05That’s the one. The analogy was the

11:07first half of 2025 was slow, confusing,

11:11disjointed, just like the movie. But

11:14then after October, the second half just

11:16clicked into gear. The quote was, “Don’t

11:18try to understand it, just feel it.”

11:20I love that. Sometimes the market is

11:21just a vibe.

11:22It is. Once the fear of missing out took

11:24over, transaction volumes just exploded.

11:27It shows how quickly psychology can

11:29turn.

11:29One more regional spot to Womba. This

11:32one seemed like a huge opportunity for

11:34small businesses.

11:34It is a great little insight into the

11:36entry-level commercial market. You can

11:38buy freehold office space there for

11:40between 750K and a million dollars.

11:43That’s the price of a studio apartment

11:44in Sydney.

11:45Exactly. And because it’s so affordable,

11:47tenants are doing the math and realizing

11:49it’s cheaper to just buy the building

11:51than to keep leasing. So you get this

11:52really robust little micro market.

11:54It’s amazing how different the drivers

11:56are. Sydney is prestige and ego. Tu

11:59womba is simple arithmetic.

12:01And that’s why you just can’t paint

12:02Australia with one brush.

12:03So let’s bring it all together. What’s

12:05the final takeaway from 2025?

12:07If you have to summarize the year, the

12:10lesson is supply versus rate cuts. We

12:13spent the whole year obsessed with the

12:15RBA. Will they cut? Won’t they?

12:18And they did. But the cuts only really

12:20help sentiment. The thing that actually

12:22kept a floor under prices, in fact,

12:24drove them up, was the chronic lack of

12:26stock.

12:27We just aren’t building enough homes.

12:29Not even close. And until that

12:30structural problem is fixed, you know,

12:32price growth seems almost baked in. No

12:34matter what rates do, the scarcity is

12:37the safety net.

12:38And looking ahead to 2026, the report

12:41mentions a bit of softness at the very

12:42end of the year.

12:43Yeah, clearance rates did dip a little

12:45in late November. The big question for

12:472026 is inflation. If it stays down,

12:51rates stay low, the party probably

12:53continues if inflation kicks up again.

12:56Well, the paradox could get even

12:57weirder.

12:58I want to leave everyone with a final

12:59thought, bringing it right back to that

13:01Blacktown unit versus the Castle Hill

13:04mansion.

13:04It’s the most important point of the

13:05whole deep dive.

13:07In a market that rose 8% nationally,

13:10where the headline is property always

13:12wins, someone lost over $100,000 in real

13:16terms by holding the wrong asset for 10

13:18years. It just destroys that old cliche.

13:21A rising tide does not lift all boats.

13:23It lifts the seaorthy ones, the ones

13:26with land, the scarce ones. But if

13:28you’re in a leaky dinghy or a generic

13:30high-rise apartment, you can absolutely

13:32sink in good weather.

13:33So, as we go into 2026, maybe the lesson

13:35is to stop worrying so much about when

13:37to buy timing, that perfect moment, and

13:40worry a lot more about what you are

13:41buying.

13:42I couldn’t have said it better myself.

13:43Thanks for joining us on the deep dive.

13:44We’ll catch you next time. M see them.