Market update: New builds, high yields offer bright spots in smaller capitals

Despite lower confidence, the analysis found that there were still opportunities to find value in lower-priced brackets, higher-yield properties, and new builds.

Here are the market conditions:

Queensland

REBAA Queensland state representative Melinda Granzien said despite years of strong growth, Queensland’s market was now in a period of adjustment as buyers became notably more cautious.

“Across South-East Queensland and many regional markets, conditions are shifting from a strong seller’s market towards a more balanced environment,” she said.

Granzien said uncertainty around tax reforms, cost-of-living pressures, and interest rate rises had reduced buyer and investor activity across many established markets.

“Buyers are taking longer to make decisions, undertaking greater due diligence and showing increased sensitivity to price and value.”

“The fear of missing out that drove much of the market over recent years has eased, with buyers now more willing to negotiate and walk away from properties they believe are overpriced.”

Granzien said properties under $1 million continued to attract solid enquiry, particularly from first home buyers and owner-occupiers.

“In contrast, many properties above the $1 million price point are experiencing reduced inspection numbers and slower decision-making unless they offer exceptional value, location or lifestyle appeal,” she said.

Ultimately, she said buyers were seeking affordability and lifestyle compared to metropolitan markets, but those with maintenance issues, poor presentation of unrealistic pricing were taking longer to sell.

“For finance-ready buyers, the current environment presents opportunities through increased choice, reduced competition and stronger negotiating positions than we have seen for several years,” Granzien said.

Western Australia

In Perth, REBAA Western Australia state representative Peter Gavalas said there had been a more recent market downturn despite strong growth earlier in the year.

Although the city started off the year with 2,000 listings, he said there had been a gradual increase to 5,733 properties heading into the end of the financial year.

“Days on market has seen a shift from around nine days to sell a property to 14 days in May. This trend appears set to continue with a lot of property campaigns now running for three weeks,” he said.

Following the rate rises, the conflict in Iran, and budget night reforms, he said there had been a major slowdown in activity, with investors reassessing their investment strategies and buying activity.

Despite the shift, Gavalas noted that high-yielding properties and yield-added options were still popular, while new builds were also receiving more attention from investors.

Meanwhile, more long-term investors have been putting their properties up for sale to avoid changes to capital gains tax, with many of the dwellings at the cheaper end of the market.

“With investors largely sidelined from the market for now, it’s been left to local buyers and first home buyers to take up the excess properties in the lower price range.”

“The first home buyer activity has, however, slowed down as confidence is low and new stock is coming to the market quicker than it can sell.”

Gavalas said he expected growth to be more moderate over the next quarter as the market absorbed the excess stock levels and consumer confidence rebounded.

“A steady interest rate setting and reduced oil prices will help buyer confidence throughout the rest of the year.”

South Australia

REBAA South Australia state representative Matt O’Donoghue said Adelaide had continued with its strong growth pattern throughout the year.

“The year was characterised by strong buyer demand, limited supply and ongoing competition from buyers looking at established low-maintenance dwellings,” O’Donoghue said.

“Buyers were purchasing with confidence and acting quickly, given that days on market also remained at historical lows.”

He said the rental market had remained tight, with rents up 3.1 per cent year-on-year, but there were predictions that they may grow six per cent to eight per cent in 2026, less than in the last few years.

With the impending budget changes, he said that investors looking at established dwellings may “sit on their hands” until the dust settled.

“Home and land packages will become an attractive alternative; however, some are reluctant to buy off the plan – rather wanting to invest in something tangible,” he said.

“Adelaide will settle because of this, and we may see the market plateau, which will be far better for buyers as we have been in a sellers’ market since post-COVID-19. Time will tell.”

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