2024 and 2025 House Cost Forecasts in Australia: An Expert Analysis

Property prices across the majority of the country will continue to rise in the next financial year, led by considerable gains in Perth, Adelaide, Brisbane and Sydney, a brand-new Domain report has forecast.

House prices in the significant cities are anticipated to increase in between 4 and 7 percent, with unit to increase by 3 to 5 percent.

By the end of the 2025 financial year, the mean home rate will have gone beyond $1.7 million in Sydney and $800,000 in Perth, according to the Domain Forecast Report. Adelaide and Brisbane will be on the cusp of breaking the $1 million mean home rate, if they have not currently hit 7 figures.

The Gold Coast housing market will also soar to brand-new records, with rates anticipated to increase by 3 to 6 percent, while the Sunlight Coast is set for a 2 to 5 percent boost.
Domain chief of economics and research Dr Nicola Powell said the forecast rate of growth was modest in a lot of cities compared to rate motions in a "strong increase".
" Rates are still increasing however not as fast as what we saw in the past financial year," she said.

Perth and Adelaide are the exceptions. "Adelaide has been like a steam train-- you can't stop it," she said. "And Perth just hasn't slowed down."

Rental prices for homes are expected to increase in the next year, reaching all-time highs in Sydney, Brisbane, Adelaide, Perth, the Gold Coast, and the Sunshine Coast.

Regional units are slated for a total rate boost of 3 to 5 percent, which "states a lot about cost in terms of buyers being steered towards more budget-friendly home types", Powell stated.
Melbourne's property market remains an outlier, with expected moderate annual development of approximately 2 percent for homes. This will leave the mean home cost at between $1.03 million and $1.05 million, marking the slowest and most inconsistent recovery in the city's history.

The Melbourne housing market experienced an extended downturn from 2022 to 2023, with the average house rate coming by 6.3% - a considerable $69,209 reduction - over a period of 5 successive quarters. According to Powell, even with an optimistic 2% growth forecast, the city's home costs will only handle to recover about half of their losses.
House rates in Canberra are prepared for to continue recuperating, with a forecasted mild development varying from 0 to 4 percent.

"According to Powell, the capital city continues to deal with difficulties in achieving a steady rebound and is anticipated to experience a prolonged and sluggish rate of progress."

With more price increases on the horizon, the report is not encouraging news for those trying to save for a deposit.

According to Powell, the implications differ depending upon the type of purchaser. For existing property owners, postponing a choice may lead to increased equity as prices are predicted to climb. On the other hand, novice buyers may need to reserve more funds. Meanwhile, Australia's real estate market is still struggling due to price and repayment capability concerns, exacerbated by the continuous cost-of-living crisis and high interest rates.

The Australian reserve bank has maintained its benchmark rate of interest at a 10-year peak of 4.35% since the latter part of 2022.

The scarcity of new real estate supply will continue to be the main motorist of residential or commercial property rates in the short term, the Domain report stated. For many years, real estate supply has been constrained by scarcity of land, weak building approvals and high construction expenses.

In somewhat favorable news for prospective purchasers, the stage 3 tax cuts will deliver more money to families, lifting borrowing capacity and, for that reason, buying power across the nation.

Powell said this might further reinforce Australia's real estate market, but might be balanced out by a decline in real wages, as living expenses rise faster than incomes.

"If wage growth stays at its existing level we will continue to see stretched cost and moistened demand," she stated.

In regional Australia, home and unit costs are anticipated to grow moderately over the next 12 months, although the outlook varies between states.

"At the same time, a growing population propped up by strong migration continues to be the wind in the sail of residential or commercial property rate growth," Powell stated.

The revamp of the migration system might trigger a decline in regional home need, as the new experienced visa path removes the requirement for migrants to reside in regional areas for 2 to 3 years upon arrival. As a result, an even bigger portion of migrants are likely to converge on cities in pursuit of superior employment opportunities, consequently lowering need in regional markets, according to Powell.

According to her, outlying regions adjacent to metropolitan centers would keep their appeal for people who can no longer manage to reside in the city, and would likely experience a rise in popularity as a result.