Commercial Investment Surge
More investors are looking toward the commercial sector, resulting in a 13% rise in commercial transaction activity.
Analysis by CBRE for the first half of 2025 says property investors are considering commercial assets as a way to diversify their portfolios.
The report shows a total of $15.5 billion in office, industrial, retail, hotel, and living assets changed hands in the first half of the year.
CBRE Australian head of capital markets research, Tom Broderick, says investors are being enticed by the higher yields achievable in the commercial market.
“Commercial property offers a higher yield than residential, typically, so returns can be higher. However, the price point is typically higher for commercial and risk can be higher also, like higher vacancy risk,” he says.
“Over the long term, rents typically rise with inflation, so commercial real estate can be a bit of a hedge against inflation.”
According to the report, there is a limited supply across sectors such as retail and office, which is likely to result in solid rental growth over the medium term.
Is it Cheaper to Rent Or Buy?
As property prices continue to rise and the pace of rental growth slows, new data shows it is cheaper to rent than buy in 94% of Australian suburbs.
Analysis by Domain shows the cost of servicing a mortgage on a house is only more affordable in 6% of Australian suburbs.
The analysis is based on median house prices, a 20% deposit and a mortgage rate of 5.68% which is compared with median asking rents for the same suburb.
In capital cities, weekly mortgage repayments are lower than weekly rents in 1.7% of suburbs, while in regional areas, it is cheaper in 14% per cent of regional suburbs.
Perth is the most favourable city for house buyers, with 4.8% of suburbs where it’s cheaper to buy than rent.
Brisbane is next with just 0.4% while in Sydney, Adelaide and Melbourne, there are no suburbs where a weekly mortgage payment is cheaper than a weekly rent.
Building Takes Time
Building approvals may be rising, but that doesn’t mean new homes will be delivered anytime soon, with the average time to build a house blowing out.
Construction time for an average home has increased by 50% in the past decade. Ten years ago, it took 8.5 months from approval to completion; in 2024, it took 12.7 months, according to the Institute of Public Affairs.
Building material costs have increased by 53% during the same period.
Western Australia has the slowest house-building times, up 85% over the decade to 17.8 months. South Australia takes 15.8 months, New South Wales, 12.7 months, Tasmania, 12.6 months, Victoria, 11.3 months and Queensland, 10.2 months.
IPA research director Morgan Begg says it's little wonder Australia is experiencing a housing crisis, with unprecedented demand for housing exacerbated by increased construction time and costs.
“Across the board, the latest figures reinforce the depth of Australia’s housing crisis, brought about by out-of-control migration intakes, a construction sector burdened by red tape, and competition for resources from large, expensive, and inefficient taxpayer-funded projects.”
Listing Slide
Total property listings are continuing to fall with an 8.8% drop in June.
SQM Research figures show that despite the drop, listings are still 1% higher than at the same time last year, which it says shows a marginal easing of tight market conditions over the longer term.
Listings are down in every capital city across the month, with the biggest declines in Melbourne, which is down 12%, followed by Adelaide, down 10.5% and Sydney, down 10.3%.
Over the course of the year, listings are up in Perth, Sydney, Adelaide, Canberra, and Hobart.
Perth listings year on year are up by 23.5%. Hotspotting has recognised for some time now that the heat and demand have come out of the Perth market after two years as a market leader for price growth.
SQM Research managing director, Louis Christoper, says the data highlights a cooling in listing activity as winter sets in.
“The flipside to this is that winter is generally a period where it is a good time to sell as buyers are still out in the marketplace, yet there is less competition between sellers.”
