2024 and 2025 Real Estate Market Predictions: Australia's Future House Rates

Property rates throughout the majority of the country will continue to rise in the next fiscal year, led by large gains in Perth, Adelaide, Brisbane and Sydney, a new Domain report has forecast.

Home costs in the major cities are anticipated to rise between 4 and 7 percent, with system to increase by 3 to 5 percent.

According to the Domain Forecast Report, by the close of the 2025 fiscal year, the midpoint of Sydney's real estate costs is expected to exceed $1.7 million, while Perth's will reach $800,000. On the other hand, Adelaide and Brisbane are poised to breach the $1 million mark, and might have already done so by then.

The Gold Coast real estate market will also soar to brand-new records, with prices expected to increase by 3 to 6 per cent, while the Sunlight Coast is set for a 2 to 5 per cent boost.
Domain chief of economics and research Dr Nicola Powell stated the forecast rate of development was modest in many cities compared to rate movements in a "strong increase".
" Prices are still increasing but not as quick as what we saw in the past financial year," she said.

Perth and Adelaide are the exceptions. "Adelaide has resembled a steam train-- you can't stop it," she said. "And Perth simply hasn't decreased."

Apartment or condos are also set to become more pricey in the coming 12 months, with units in Sydney, Brisbane, Adelaide, Perth, the Gold Coast and the Sunlight Coast to hit brand-new record prices.

Regional units are slated for a general rate increase of 3 to 5 percent, which "states a lot about cost in regards to buyers being guided towards more economical property types", Powell stated.
Melbourne's home market remains an outlier, with anticipated moderate yearly growth of as much as 2 percent for houses. This will leave the mean home price at between $1.03 million and $1.05 million, marking the slowest and most irregular recovery in the city's history.

The Melbourne housing market experienced an extended slump from 2022 to 2023, with the average home price stopping by 6.3% - a substantial $69,209 decrease - over a duration of 5 consecutive quarters. According to Powell, even with an optimistic 2% development forecast, the city's house costs will just handle to recoup about half of their losses.
House costs in Canberra are prepared for to continue recuperating, with a predicted mild development varying from 0 to 4 percent.

"According to Powell, the capital city continues to deal with obstacles in achieving a stable rebound and is expected to experience an extended and slow pace of progress."

The projection of impending price hikes spells problem for potential homebuyers struggling to scrape together a deposit.

According to Powell, the ramifications vary depending on the kind of purchaser. For existing house owners, postponing a decision may result in increased equity as costs are forecasted to climb up. On the other hand, first-time buyers might need to reserve more funds. On the other hand, Australia's real estate market is still having a hard time due to affordability and repayment capacity concerns, worsened by the continuous cost-of-living crisis and high interest rates.

The Australian reserve bank has preserved its benchmark rates of interest at a 10-year peak of 4.35% given that the latter part of 2022.

The shortage of brand-new real estate supply will continue to be the primary driver of property costs in the short term, the Domain report stated. For several years, housing supply has been constrained by scarcity of land, weak building approvals and high building expenses.

In rather positive news for prospective buyers, the stage 3 tax cuts will deliver more money to households, lifting borrowing capacity and, therefore, buying power across the country.

Powell stated this could further reinforce Australia's housing market, but may be offset by a decline in real wages, as living costs rise faster than salaries.

"If wage growth stays at its current level we will continue to see stretched affordability and moistened need," she stated.

In local Australia, home and system rates are anticipated to grow reasonably over the next 12 months, although the outlook varies between states.

"At the same time, a swelling population, fueled by robust influxes of new locals, offers a considerable boost to the upward trend in property values," Powell stated.

The revamp of the migration system might activate a decrease in local residential or commercial property demand, as the new skilled visa path gets rid of the need for migrants to reside in local locations for 2 to 3 years upon arrival. As a result, an even larger percentage of migrants are likely to converge on cities in pursuit of superior employment opportunities, subsequently lowering need in local markets, according to Powell.

Nevertheless regional areas close to cities would stay attractive locations for those who have been priced out of the city and would continue to see an increase of need, she included.