Australian Housing Market Outlook: Rate Forecasts for 2024 and 2025

A current report by Domain forecasts that property rates in numerous areas of the nation, especially in Perth, Adelaide, Brisbane, and Sydney, are expected to see considerable increases in the upcoming financial

Across the combined capitals, home rates are tipped to increase by 4 to 7 percent, while system costs are expected to grow by 3 to 5 per cent.

By the end of the 2025 financial year, the median home rate will have exceeded $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 cracking the $1 million median home cost, if they haven't already strike 7 figures.

The Gold Coast real estate market will also soar to brand-new records, with costs expected to rise by 3 to 6 percent, while the Sunlight Coast is set for a 2 to 5 per cent increase.
Domain chief of economics and research Dr Nicola Powell stated the projection rate of growth was modest in most cities compared to rate motions in a "strong growth".
" Prices are still increasing but not as fast as what we saw in the past fiscal year," she stated.

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

Homes are likewise 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 strike new record costs.

Regional units are slated for a total cost increase of 3 to 5 percent, which "states a lot about cost in regards to buyers being guided towards more budget friendly residential or commercial property types", Powell said.
Melbourne's realty sector differs from the rest, expecting a modest annual increase of approximately 2% for homes. As a result, the median home price is predicted to stabilize in between $1.03 million and $1.05 million, making it the most sluggish and unforeseeable rebound the city has ever experienced.

The Melbourne housing market experienced an extended slump from 2022 to 2023, with the average home price coming by 6.3% - a significant $69,209 decline - over a duration of five successive quarters. According to Powell, even with an optimistic 2% growth forecast, the city's house costs will only manage to recover about half of their losses.
Home costs in Canberra are prepared for to continue recovering, with a predicted mild growth ranging from 0 to 4 percent.

"The country's capital has struggled to move into a recognized recovery and will follow a similarly slow trajectory," Powell said.

The forecast of approaching rate walkings spells bad news for potential property buyers struggling to scrape together a down payment.

According to Powell, the implications vary depending upon the kind of purchaser. For existing homeowners, delaying a decision may result in increased equity as costs are forecasted to climb up. On the other hand, first-time buyers might require to set aside more funds. Meanwhile, Australia's real estate market is still having a hard time due to price and payment capacity concerns, intensified by the ongoing cost-of-living crisis and high rate of interest.

The Reserve Bank of Australia has kept the official money rate at a decade-high of 4.35 percent because late last year.

The lack of new housing supply will continue to be the primary chauffeur of property prices in the short term, the Domain report said. For many years, real estate supply has actually been constrained by shortage of land, weak structure approvals and high construction expenses.

A silver lining for prospective homebuyers is that the upcoming phase 3 tax reductions will put more money in people's pockets, therefore increasing their ability to get loans and ultimately, their purchasing power nationwide.

Powell said this could even more strengthen Australia's real estate market, however might be balanced out by a decline in real wages, as living costs rise faster than earnings.

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

Across rural and suburbs of Australia, the worth of homes and houses is anticipated to increase at a steady rate over the coming year, with the projection varying from one state to another.

"All at once, a swelling population, sustained by robust influxes of new homeowners, supplies a considerable boost to the upward trend in home worths," Powell specified.

The revamp of the migration system may activate a decrease in regional home need, as the new skilled visa path gets rid of the need for migrants to live in regional locations for 2 to 3 years upon arrival. As a result, an even larger portion of migrants are likely to converge on cities in pursuit of superior job opportunity, subsequently lowering need in regional markets, according to Powell.

Nevertheless regional locations near to metropolitan areas would stay attractive areas for those who have been evaluated of the city and would continue to see an increase of demand, she included.