Summer typically brings a lull in property activity compared to the spring peak, as buyers turn their attention to the beach, the cricket, and making sure there’s enough prawns in the fridge for Christmas lunch. But this year, the market shows signs of staying hot.
The supply of affordable housing, or lack thereof, remains the dominant theme.
Since March 2020, the median dwelling price has jumped 47.3 per cent to $872,500, according to Cotality’s November 2025 Housing Affordability Report.
The median house now costs 8.9 times the average income, up from 6.6 times five years ago.
Part of the issue is that supply-side pressures remain acute, as noted by Cotality.
Over the past five years, the need for about 1 million new households was created, yet only 880,000 new homes were completed, underscoring a persistent housing shortfall.
Commenting on the analysis, Cotality head of research, Eliza Owen, says a combination of pandemic and post-pandemic factors had eroded affordability.
“This surge was fuelled by pandemic-era monetary stimulus and record-low interest rates that supercharged borrowing capacity and demand, even as housing supply lagged well behind household formation,” she says.
“Supply-side limitations have also compounded these demand pressures with construction sector insolvencies, rising material costs, and planning bottlenecks restricted new housing delivery.
“In short, the past five years combined extraordinary demand drivers with supply constraints, creating an extraordinary boom in both home values and rents.”
But the past year alone has seen housing demand surge. Three rate cuts from the Reserve Bank of Australia (RBA) in 2025 and the earlier-than-anticipated expansion of the government’s 5 per cent Deposit Scheme on 1 October have added further fuel to the fire, creating an intriguing scenario for first home buyers and investors.
While first home buyers are fighting hard to enter the market as soon as they can, investors – better positioned to weather rate changes – have also been flooding in, particularly as consensus grows that the RBA is unlikely to deliver further rate relief in the near term.
Together, these dynamics are turning up the heat in the property market, making it a season in which brokers will be key to helping clients secure the best outcomes.
First home buyers
One of the big questions about this summer property season is how many first home buyers are going to be in the market, and early data suggests they’re going to be active.
Figures from Housing Minister Clare O’Neil, seen by The Adviser, show 5,778 first home buyer guarantees were issued under the scheme in October 2025 – 48 per cent higher than the 3,901 guarantees issued in October 2024 – before the scheme was expanded.
The Treasury estimates that 70,000 homes will be bought in the first year of
the expanded scheme – 20,000 more than under the previous place cap.
Victorian-based broker Mark Guglielmino from Capra Financial Group says his brokerage has seen a sizable spike in first home buyer activity.
“We’re seeing significant increases in demand as more first home buyers are able to utilise the lower deposit scheme to purchase property,” he says.
“We think the first home buyer market will continue to have strong demand under the price caps of the government 5% deposit scheme and we’re putting extra focus on ensuring our clients have solid long term plans in place, with affordability considerations at the top of our recommendations when discussing options with clients.”
Rising prices have also led to an increase in strategies such as co-buying.
Paul Sullivan, broker and owner-manager of Mortgage Choice in Pascoe Vale, tells The Adviser he has seen an uptick in joint mortgage inquiries among first home buyers and young professionals who are finding it difficult to enter the market on their own.
Sullivan says the main driver is affordability, but ending capacity is another factor.
“With interest rates still relatively high and lenders tightening assessment criteria, pooling resources with a sibling, friend or partner can make ownership achievable years sooner than going solo,” Sullivan says.
Property investors
While first home buyers scramble to get a foothold, investors are swooping in.
Investor lending climbed to record levels in the September 2025 quarter, supported by easing borrowing costs and tight rental vacancies, ABS data shows.
The number of new investment loans jumped 13.6 per cent to 57,624 over the quarter, driving annual growth of 12.3 per cent. This marked the highest level of investor lending on record, surpassing the previous peak of 52,787 loans set in the March quarter 2022.
Year on year, the value of new investor loans has surged 18.7 per cent, with total investor lending hitting a new record high. Investor loan commitments reached $39.8 billion in the September quarter, up 17.6 per cent or $6.0 billion from the June quarter and surpassing the previous record of $33.8 billion set in the June 2025 quarter.
Average investor loan sizes have also increased, rising by $11,686 over the quarter to $685,634. Growth in investment lending was recorded across all states and territories, led by the ACT (27.8 per cent), followed by NSW (19.0 per cent), Victoria (18.5 per cent), Queensland (11.9 per cent), Tasmania (10.6 per cent), Western Australia (9.1 per cent), South Australia (7.1 per cent), and the Northern Territory (5.1 per cent).
Guglielmino says he’s observed plenty of activity from his investor clients and notes the number of investors returning to the Victorian market.
“We are seeing more investors come back to the Victorian market given the relative price discounts in comparison with other major cities,” he says.
“We believe there will be slow but steady growth in investor appetite in Victoria despite the higher taxes and holding costs as people start to get priced out of Brisbane, Adelaide and Perth markets.”
The investor surge also seems to have caught the prudential regulator’s eyes.
In its System Risk Outlook, released in November 2025, the Australian Prudential Regulation Authority (APRA) warned investor activity – combined with an expected rise in high loan-to-valuation ratio (LVR) loans under the government’s expanded 5 per cent Deposit Scheme and intensifying competition among lenders – could create pressure to loosen underwriting standards and increase lenders’ risk appetite.
APRA did note that borrowers and lenders exposed to the housing market have maintained a high level of resilience, but cautioned this could erode over time.
“For example, if lower interest rates (which tend to increase borrowers’ demand for loans) coincided with a deterioration in lending standards, this could lead to a rise in risky lending. Household debt may increase further, and some households may struggle to manage their repayments. If an economic shock occurred in that environment, this could result in higher default levels and credit losses for banks,” APRA said.
Heating up
With both first home buyers and investors circling a tightly constrained market, this summer property season is shaping up to be one of heightened competition and stretched affordability.
For brokers, the challenge will be to guide clients through policy changes, rising loan sizes, and tighter serviceability, balancing urgency with prudence. Those who can do so will be best placed to navigate what could be one of the hottest summer markets in years.
