Insights from Dr. Diaswati Mardiasmo
As Australia grapples with a cost-of-living crisis, the property market has become a central concern for many Australians, particularly young people struggling to navigate skyrocketing prices. To understand what lies ahead, we sat down with Dr. Diaswati (Asti) Mardiasmo, Chief Economist at PRD Real Estate. With over a decade of experience at PRD, Dr. Mardiasmo is a trusted voice in Australia’s property sector, known for her deep analysis and clear insights.
Who is Dr. Diaswati Mardiasmo?
Dr. Mardiasmo holds a Ph.D. in Asset Infrastructure and Management and has been instrumental in shaping property research in Australia. As the Chief Economist at PRD, she leads nationwide research efforts, advising on trends affecting property values, migration, and market recovery. A Brisbane local originally from Indonesia, Dr. Mardiasmo brings an international perspective to her work.
During our chat, she shared her views on the major factors influencing the market today, why some cities are thriving while others are struggling, and what we can expect as we head into 2025.
Brisbane: The Market Leader
Brisbane is currently leading the pack, with property prices surpassing Melbourne for the first time in years. The city’s minimal COVID-19 lockdowns, infrastructure investments, and the buzz around the upcoming 2032 Olympics have transformed it into a hub for growth.
“Brisbane became the safer bet during the pandemic,” Dr. Mardiasmo explained. “Shorter lockdowns, a lifestyle appeal, and major projects like Queen’s Wharf and the upcoming Olympics have made it a magnet for growth.”
Brisbane’s growth drivers include:
- Increased Migration: Many Australians relocated to Brisbane during and after COVID for its affordability and lifestyle benefits.
- Major Infrastructure Projects: Investments like the Queen’s Wharf redevelopment and Olympic-related developments are boosting demand.
- Lifestyle Appeal: Brisbane’s sunny weather and beaches continue to attract both domestic and international buyers.
However, the downside is that Brisbane is no longer the affordable city it once was. Property prices now rival Melbourne’s, putting pressure on first-home buyers and renters alike.
Melbourne: Recovery in Progress
Melbourne’s property market tells a very different story. Hit hard by prolonged COVID-19 lockdowns, the city saw a 25% drop in property values during the pandemic. Recovery has been slow, with interest rate hikes adding further strain.
“Melbourne’s deep decline during COVID and the subsequent interest rate hikes created a double hit,” Dr. Mardiasmo said.
Key challenges facing Melbourne include:
- Reduced Investor Confidence: Lockdowns and economic uncertainty have driven many investors away.
- Migration Slowdown: Melbourne is recovering more slowly than Brisbane or Sydney when it comes to attracting new residents.
- Weaker Regional Markets: Areas like Ballarat and Bendigo have seen limited demand, slowing overall recovery.
Perth and Adelaide: Late Bloomers
While Brisbane and Sydney dominate headlines, Perth and Adelaide have emerged as surprise performers. After years of stagnation, both cities are now experiencing steady growth.
“Perth and Adelaide are benefiting from being late bloomers,” Dr. Mardiasmo noted. “They’re finally catching up to the rest of the country.”
Factors driving growth in these cities include affordability, lifestyle appeal, and an influx of buyers priced out of Brisbane and Sydney. Perth, in particular, has benefited from a resurgence in the mining sector, which has created jobs and boosted local demand.
The Cost-of-Living Crisis and First-Home Buyers
Young Australians are feeling the pinch more than ever. Rising living costs, stricter lending criteria, and high property prices are making homeownership increasingly difficult.
“Affordability remains a major barrier,” Dr. Mardiasmo explained. “In Brisbane, once known as an affordable alternative, property prices are now comparable to Melbourne’s.”
Banks are closely scrutinizing spending habits, including discretionary expenses like Uber Eats and Afterpay, which can negatively affect loan approvals. For many first-home buyers, even saving for a deposit is a challenge as income growth fails to keep pace with inflation.
A Snapshot of Housing Affordability
The following table highlights how much of an average income is needed to service a mortgage in 2024:
| State | % of Income Needed for Repayments |
|---|---|
| New South Wales | 58% |
| Queensland | 40% |
| Victoria | 50% |
This financial strain is particularly acute in New South Wales, where more than half of an average household’s income is required to meet mortgage repayments.
What’s Ahead for 2025?
With interest rates stabilizing, Dr. Mardiasmo expects the property market to find some balance. However, many potential buyers and investors are holding off, waiting for the Reserve Bank to cut rates.
“Once rates drop, we’ll likely see a surge in demand,” she said. “That could push prices higher again, especially in high-demand markets like Brisbane and Perth.”
For investors, 2025 could bring new opportunities as stabilizing rates encourage renewed activity. But for young Australians and first-home buyers, the road ahead remains challenging. Unless income growth accelerates or new affordability measures are introduced, many will continue to struggle to enter the property market.
Australia’s property market is a tale of two cities—or more accurately, two trajectories. While Brisbane thrives and Perth and Adelaide catch up, Melbourne faces an uphill battle. For young Australians, the dream of homeownership feels increasingly out of reach.
The key to navigating 2025’s property market? Stay informed, plan strategically, and be prepared for potential rate changes that could shift the landscape once again.
