Why the Australian property market keeps rising
Australia’s residential real estate market continues to rise, despite rates remaining on hold in recent months. Jobs remain strong and a chronic undersupply of property hasn’t been solved, nor will it anytime soon.
State and Federal governments continue to talk about planning changes, yet the reality on the ground is more and more project delays as developers and builders struggle to make the numbers work.
Residential real estate now represents around $12 trillion in value. Gains are across the board, however the most affordable floor price markets are the most popular and have seen the biggest gains. I’ve written about this several times in recent years.
Crowding out
Investors, first home buyers and now increasingly more SMSF investors are all chasing the same type of property - sub $1m price points in major metro areas.
Now that single dwelling houses have moved above this price point, apartments are starting to rise. We think this trend will continue into 2026. It’s no longer about preference, rather necessity.
There’s perhaps another factor at play that many have overlooked. The Australian stock market has been lacklustre in performance and in its ability to attract serious listings over the past decade. We have one of the most boring stock markets in the developed world.
While the US forges ahead with the world’s most innovative companies, our public markets have been slowly dying.
According to ChatGPT (who never gets anything wrong, right?) new ASX listing volume has fallen roughly 70–80 % from its earlier averages.
Active investing is dying
My good friend Ninus Kanna recently wrote a great note about the death of active markets investing and the rise of passive investing via ETFs. Ninus and I started our careers at Huntleys’ (which later become Morningstar) writing stock market research.
Our bosses would edit our notes with red ink and sometimes send back their version by hand or fax. They eventually started using Microsoft Word and tracking changes.
Our office was above the stock market, where punters would gather daily to watch the bourse. It was all about being active and finding gems. Stock market investing was a ‘skin in the game’ business.
Today, it’s all about passive, index ETFs and low cost fees. A race to the bottom, driven by price. Not conviction.
For investors who want to roll their sleeves up and put their money to work, property has continued to grow as an alternative. Particularly in their self-managed super funds (SMSF).
Growth in SMSF property
We estimate that of the more than 644k SMSF structures in Australia, around 15% have some type of direct property. With Labor shelving proposed super legislation, that number could continue to rise in coming years. Lenders like AMP are looking to get back into the SMSF lending market.
I recently caught up with Jared Zak, who runs one of Australia’s largest conveyancing companies, to explore SMSF lending further. According to him, around 70% of his SMSF clients are looking at buying either brand-new property or in Victoria. Again, entry level, where there is value.
I’ll have my 2026 outlook for you before Christmas. If you haven’t already, I encourage you to subscribe so that you can get each update once we release it to our readers.
PS: I never use AI to write my notes, I do however ask it to check my spelling and tell me if I’ve written anything silly.