Australian real estate transaction volumes drop 13% to $8.2b in H1

Buyers are being deterred by geopolitical uncertainties.

In a recent report, Dexus Research revealed that all the unlisted real estate sectors in Australia recorded sharply improving returns in the year to June after a period of weakness. Retail and industrial funds reported solid returns of 7.6% and 6.2% p.a. respectively. Office funds also improved with -0.6% for the year.

“A positive capital return for diversified funds in the month of June indicates the valuation cycle bottomed in H1 2025. Returns for all sectors are expected to move back above 7% per annum within 12 months as revaluations turn positive,” the report said.

Here’s more from Dexus Research:

Faced with a recovery in real estate returns, it will be interesting to see how quickly Fear of Acting Too Early (FATE) gives way to Fear Of Missing Out (FOMO). Real estate markets have clearly bottomed. Income growth signals a recovery in values over the next few years. The reporting of positive returns, by itself, should boost confidence and stimulate deal flow.

Australian shares had a strong finish to the year after a tariff-induced slump in April, returning 13.8%. AREITs followed suit, returning 15.4%. The strengthening of AREIT pricing over the past year indicates increasing confidence in the prospect of growth in the values of underlying assets.

Real estate transaction volumes eased in H1 2025, down 13.4% on the same period last year at $8.2 billion. The fall appears attributable to vendors holding on for a higher price and geopolitical uncertainty deterring buyers. Retail volumes bucked the trend, rising by 3.0% while the other sectors eased. Office transaction volumes were down 16.8%. Over the past year the number of office buildings traded over a size of $100 million was less than half the pre-COVID average.

Activity is expected to strengthen in the year ahead given an easing of interest rates and improving sentiment as valuations grow.