Why the Fundamentals Suggest Australia’s Property Prices May Keep Rising & Why Noosa is Poised for Further Increases in Demand

Australia’s love affair with property runs deep, woven into the fabric of our national identity. For generations, home ownership has symbolized more than just a milestone - it’s been a cornerstone of wealth, security, and pride. This cultural connection ensures that the nation’s sense of prosperity often mirrors the performance of the property market.

As the population grows and major cities become increasingly congested, a ripple effect is driving demand for lifestyle destinations like Noosa. Many property owners in key interstate markets are cashing out and relocating, drawn by the promise of a more relaxed, less crowded environment without compromising on quality of life. For these buyers, Noosa offers the perfect balance: premium properties at potentially lower costs than their previous homes in major cities.

7 Key Factors Driving Australia's Property Market Upward

Despite ongoing discussions about market “cooling” or “corrections,” several key factors suggest that property prices are poised for continued growth in the years ahead.

1. Migration Outpacing Housing Supply

Australia’s population is growing rapidly, driven by strong migration numbers. According to the Australian Bureau of Statistics (ABS), net overseas migration reached 578,400 people in the year ending March 2025, accounting for a significant portion of the nation’s population growth.

The Housing Industry Association (HIA) highlights that this influx has pushed Australia’s population beyond 27.5 million in early 2025, with migration levels remaining well above the pre-pandemic decade average of 220,000. This sustained growth continues to outpace the construction of new homes, creating a persistent imbalance between supply and demand.

HIA Chief Economist Tim Reardon emphasizes that while recent policy changes aim to address housing shortages, the current mismatch between federal migration policies and state-level housing supply remains a key challenge. This imbalance places ongoing upward pressure on both property prices and rental markets.

Source: HIA – Demand for housing continues to outpace supply

2. Chronic Housing Undersupply

Government projections for new housing completions have repeatedly fallen short of what’s needed. Housing Australia’s State of the Housing System 2025 report revealed that while annual demand ranges between 144,000 and 179,000 dwellings, actual completions remain well below these figures.

The Institute of Public Affairs (IPA) estimates a cumulative shortfall of nearly 180,000 dwellings between 2022 and 2024, driven by population growth and migration. This ongoing undersupply is a key driver of price growth.

Source: State of the Housing System 2025

3. Restrictive Development Regulations

Strict zoning laws and planning regulations make it challenging to release new land or increase housing density in high-demand areas. While these policies aim to preserve local character, they also severely limit the supply of new housing.

The Centre for Independent Studies’ report on Housing Affordability and Supply Restrictions highlights how these planning rules are a structural barrier to addressing Australia’s housing shortage.

Source: CIS - Housing Affordability and Supply Restrictions

4. Skilled Labor Shortages in Construction

Even when development approvals are granted, the construction industry faces significant workforce shortages. A lack of skilled builders and contractors, combined with rising input costs, has slowed the pace of new housing delivery.

The Australian Bureau of Statistics continues to report lower-than-expected dwelling completions relative to approvals, reflecting these capacity constraints.

Source: ABS Building Approval Statistics

Source: ABC News Article

5. Rising Construction Costs

Building costs have surged dramatically in recent years. The ABS Building Construction Price Index shows that from September 2020 to June 2024, house construction prices rose by over 40%, while overall building costs increased by 31%.

These escalating costs are pushing more buyers toward established homes, intensifying competition in the resale market and driving prices higher.

Source: ABS Producer Price Indexes

6. Government Incentives Driving Demand

While government grants and incentives for first-home buyers are well-intentioned, they often have the unintended consequence of inflating entry-level property prices.

With the national median dwelling price now around $750,000 (CoreLogic, 2025), these incentives funnel additional demand into an already limited pool of affordable homes, further increasing competition and prices in this segment.

Source: Property Investor – Are government grant pushing prices up?

7. Potential Interest Rate Easing

Although interest rates remain higher than the record lows of 2021, there is growing speculation that the Reserve Bank of Australia may begin cutting rates in the near future.

Historically, lower borrowing costs have been a powerful catalyst for rising property prices, as improved affordability and renewed buyer confidence drive demand.

Source: Yahoo Finance

Additional Factors Contributing to Noosa’s Soaring Prices

1. The Rise of Noosa as a Blue-Chip Location

Noosa's appeal has captured the attention of high-net-worth individuals, including billionaires, celebrities, and mining magnates. This influx of affluent buyers has solidified its reputation as a blue-chip property location—a safe haven for capital investment. The confidence of these discerning purchasers signals long-term stability and growth potential for the local market, attracting further interest from across the country and the world.

2. A Market of Low Supply and High Demand

What truly sets Noosa apart is its unique geographical and regulatory landscape. The area is famously constrained by restrictive development policies and is largely "land-banked" by the surrounding Noosa National Park. This creates a fundamental scarcity of new land and housing stock. Consequently, while demand continues to surge due to its lifestyle appeal and investment security, the supply remains exceptionally low, placing consistent upward pressure on property prices in key areas.

Source: Domain Article - Noosa Heads to double in price by 2032 to a $4.3 million median