Predicting the Future: Australia's Housing Market in 2024 and 2025

A recent report by Domain forecasts that real estate rates in different areas of the country, especially in Perth, Adelaide, Brisbane, and Sydney, are anticipated to see significant boosts in the upcoming financial

Throughout the combined capitals, house rates are tipped to increase by 4 to 7 per cent, while system costs are prepared for to grow by 3 to 5 per cent.

By the end of the 2025 financial year, the median house price will have gone beyond $1.7 million in Sydney and $800,000 in Perth, according to the Domain Projection Report. Adelaide and Brisbane will be on the cusp of cracking the $1 million mean home price, if they have not already strike seven figures.

The real estate market in the Gold Coast is expected to reach brand-new highs, with rates forecasted to increase by 3 to 6 percent, while the Sunlight Coast is anticipated to see an increase of 2 to 5 percent. Dr. Nicola Powell, the chief economic expert at Domain, noted that the anticipated growth rates are fairly moderate in the majority of cities compared to previous strong upward trends. She pointed out that prices are still increasing, albeit at a slower than in the previous monetary. The cities of Perth and Adelaide are exceptions to this pattern, with Adelaide halted, and Perth showing no indications of slowing down.

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

According to Powell, there will be a basic rate rise of 3 to 5 percent in local units, showing a shift towards more budget-friendly residential or commercial property alternatives for buyers.
Melbourne's real estate sector differs from the rest, preparing for a modest yearly boost of approximately 2% for residential properties. As a result, the mean home price is forecasted to support between $1.03 million and $1.05 million, making it the most slow and unforeseeable rebound the city has ever experienced.

The Melbourne housing market experienced a prolonged downturn from 2022 to 2023, with the typical house cost stopping by 6.3% - a substantial $69,209 decrease - over a period of 5 successive quarters. According to Powell, even with an optimistic 2% growth forecast, the city's home prices will only handle to recover about half of their losses.
Home prices in Canberra are expected to continue recuperating, with a predicted mild growth varying from 0 to 4 percent.

"According to Powell, the capital city continues to face difficulties in attaining a stable rebound and is expected to experience an extended and slow rate of progress."

The forecast of approaching rate walkings spells bad news for prospective property buyers having a hard time to scrape together a deposit.

According to Powell, the implications vary depending on the kind of purchaser. For existing house owners, delaying a decision may lead to increased equity as rates are predicted to climb up. In contrast, first-time buyers may require to reserve more funds. On the other hand, Australia's housing market is still struggling due to affordability and repayment capacity issues, worsened by the continuous cost-of-living crisis and high interest rates.

The Australian central bank has preserved its benchmark rate of interest at a 10-year peak of 4.35% considering that the latter part of 2022.

According to the Domain report, the minimal schedule of brand-new homes will stay the main factor influencing property values in the near future. This is due to a prolonged lack of buildable land, slow building and construction authorization issuance, and raised structure expenditures, which have actually restricted housing supply for an extended period.

In somewhat 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 might even more boost Australia's real estate market, however might be balanced out by a decrease in real wages, as living expenses increase faster than earnings.

"If wage growth remains at its present level we will continue to see stretched price and moistened demand," she said.

In regional Australia, house and unit costs are expected 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 property price development," Powell stated.

The revamp of the migration system may trigger a decrease in local home need, as the new skilled visa path removes the requirement for migrants to live in regional areas for two to three years upon arrival. As a result, an even larger portion of migrants are most likely to converge on cities in pursuit of exceptional employment opportunities, subsequently reducing demand in local markets, according to Powell.

According to her, far-flung areas adjacent to metropolitan centers would keep their appeal for individuals who can no longer afford to live in the city, and would likely experience a rise in appeal as a result.