2024 and 2025 House Cost Forecasts in Australia: A Specialist Analysis

A current report by Domain predicts that property costs in numerous regions of the nation, particularly in Perth, Adelaide, Brisbane, and Sydney, are expected to see considerable increases in the upcoming monetary

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

By the end of the 2025 financial year, the mean house cost will have surpassed $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 house rate, if they haven't currently hit 7 figures.

The housing market in the Gold Coast is anticipated to reach brand-new highs, with costs predicted to increase by 3 to 6 percent, while the Sunshine Coast is prepared for to see a rise of 2 to 5 percent. Dr. Nicola Powell, the primary economist at Domain, kept in mind that the expected development rates are relatively moderate in many cities compared to previous strong upward patterns. She discussed that rates are still increasing, albeit at a slower than in the previous financial. The cities of Perth and Adelaide are exceptions to this pattern, with Adelaide halted, and Perth showing no signs of decreasing.

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

According to Powell, there will be a general price rise of 3 to 5 percent in regional systems, showing a shift towards more affordable home options for purchasers.
Melbourne's real estate sector differs from the rest, anticipating a modest yearly boost of up to 2% for homes. As a result, the typical house cost is predicted to stabilize between $1.03 million and $1.05 million, making it the most slow and unpredictable rebound the city has ever experienced.

The Melbourne housing market experienced a prolonged depression from 2022 to 2023, with the average house rate dropping by 6.3% - a considerable $69,209 decline - over a period of five successive quarters. According to Powell, even with a positive 2% growth forecast, the city's home prices will only handle to recoup about half of their losses.
House prices in Canberra are expected to continue recuperating, with a forecasted moderate development ranging from 0 to 4 percent.

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

The forecast of approaching cost walkings spells bad news for prospective homebuyers having a hard time to scrape together a deposit.

According to Powell, the implications differ depending upon the kind of buyer. For existing homeowners, delaying a choice might lead to increased equity as prices are projected to climb. On the other hand, newbie buyers might need to reserve more funds. On the other hand, Australia's real estate market is still struggling due to affordability and repayment capacity issues, worsened by the continuous cost-of-living crisis and high rates of interest.

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

According to the Domain report, the limited availability of new homes will remain the primary element affecting residential or commercial property worths in the future. This is because of an extended scarcity of buildable land, slow building and construction permit issuance, and elevated building expenses, which have restricted housing supply for an extended duration.

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

According to Powell, the real estate market in Australia might receive an additional boost, although this might be counterbalanced by a decrease in the purchasing power of consumers, as the cost of living increases at a faster rate than salaries. Powell warned that if wage growth stays stagnant, it will result in an ongoing battle for cost and a subsequent reduction in demand.

In regional Australia, house and unit prices 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 home cost development," Powell stated.

The existing overhaul of the migration system might result in a drop in demand for regional real estate, with the introduction of a new stream of skilled visas to get rid of the reward for migrants to reside in a local area for two to three years on going into the country.
This will mean that "an even greater proportion of migrants will flock to cities searching for much better task prospects, therefore moistening need in the local sectors", Powell said.

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