Australia’s residential property market is currently at its lowest point, with a recovery not anticipated until after Easter next year, according to John McGrath, founder and CEO of McGrath Estate Agents. McGrath attributes the downturn to high interest rates, government tax changes, and geopolitical volatility, particularly in the Middle East. House and apartment prices have fallen by as much as 15 percent in some areas.
Speaking during the release of the 2027 McGrath real estate report, McGrath emphasized the need for stabilisation and a reduction in interest rates to encourage market recovery. He said that historically, once these conditions are met, the market tends to trend upwards within six to nine months. Melbourne has been described as the hardest hit city, a situation McGrath partially blames on federal Labor’s tax reforms introduced in the May budget. Sydney’s western suburbs are also struggling, though some parts of Sydney’s eastern and inner west suburbs showed signs of improvement over the past weekend.
Price declines across various areas have been inconsistent. While some locations experienced falls rarely exceeding 10 percent, others, including Melbourne and Sydney’s inner west, have seen drops of between 10 and 12 percent. McGrath advised buyers that once the market begins to recover, it is likely to do so rapidly, suggesting that prospective homeowners should not delay their purchases.
Among McGrath’s recommended areas for buyers are Boronia in Melbourne, Palm Beach on Queensland’s Gold Coast, and Sydney suburbs such as Campsie and Glebe. A recent transaction in Glebe highlights the activity within Sydney’s inner west: two high school math teachers, Cassandra Church and Dean Mackrell, purchased a renovated six-bedroom terrace for $3.43 million. They moved from a smaller apartment in Pyrmont, keeping that property as an investment. The couple cited good value and the neighborhood’s proximity to green spaces, schools, and cultural diversity as key factors in their decision.
Theo Kotsias, a longtime local agent who facilitated the Glebe sale, noted the area’s appeal to buyers seeking lifestyle advantages close to the city and university precincts. He described the market at the upper end of Glebe as attracting significant investment.
McGrath identified Melbourne as the most undervalued housing market in the country and expressed strong criticism of Victoria’s state government, ahead of elections scheduled for November 28. He described widespread frustration among investors over a cascade of taxes, including land tax and absentee owner levies, accusing the authorities of discouraging property investment through excessive taxation. Additionally, he called for streamlined planning approvals, pointing out that current processes can take up to two years, while technological advancements could reduce this timeframe dramatically.
Citing Housing Industry Association data, McGrath highlighted that property development ranks as one of Australia’s most heavily taxed sectors, with government charges comprising up to half the cost of building houses or apartments. He dismissed the notion that developers bear undue blame, placing responsibility instead on government policies.
Regarding the federal Labor government, McGrath expressed disapproval of the May budget’s impact on the real estate market, stating it undermines Australians’ property aspirations. He said his own business has seen a significant revenue decline compared to last year, with some competitors experiencing reductions of 35 to 50 percent. While no staff layoffs have occurred at McGrath Estate Agents, hiring has been frozen as the company adjusts to market conditions.
He concluded that many investors remain on the sidelines amid current uncertainties, and predicted an ongoing challenging environment for the housing sector.