Australian Real Estate Market Outlook: Price Projections for 2024 and 2025

A recent report by Domain anticipates that real estate rates in different areas of the nation, particularly 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 anticipated to grow by 3 to 5 percent.

By the end of the 2025 fiscal year, the average home price 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 splitting the $1 million average home cost, if they have not already strike seven figures.

The real estate market in the Gold Coast is expected to reach brand-new highs, with prices forecasted to increase by 3 to 6 percent, while the Sunshine Coast is expected to see a rise of 2 to 5 percent. Dr. Nicola Powell, the chief economist at Domain, noted that the anticipated growth rates are reasonably moderate in most cities compared to previous strong upward patterns. She pointed out that costs are still increasing, albeit at a slower than in the previous monetary. The cities of Perth and Adelaide are exceptions to this trend, with Adelaide halted, and Perth revealing no signs of decreasing.

Rental rates for apartments are anticipated 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 rate rise of 3 to 5 per cent in local units, suggesting a shift towards more economical property alternatives for buyers.
Melbourne's real estate sector stands apart from the rest, preparing for a modest yearly increase of approximately 2% for houses. As a result, the average home rate is projected to support in between $1.03 million and $1.05 million, making it the most sluggish and unpredictable rebound the city has actually ever experienced.

The Melbourne housing market experienced a prolonged depression from 2022 to 2023, with the average house cost coming by 6.3% - a significant $69,209 reduction - over a duration of five consecutive quarters. According to Powell, even with a positive 2% development projection, the city's house costs will just manage to recoup about half of their losses.
Canberra home rates are also expected to stay in healing, although the forecast growth is moderate at 0 to 4 percent.

"The nation's capital has struggled to move into a recognized healing and will follow a similarly slow trajectory," Powell stated.

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

"It indicates various things for various types of buyers," Powell said. "If you're an existing resident, prices are expected to rise so there is that component that the longer you leave it, the more equity you may have. Whereas if you're a first-home purchaser, it might imply you need to conserve more."

Australia's real estate market remains under significant stress as homes continue to face price and serviceability limits amid the cost-of-living crisis, heightened by continual high rates of interest.

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

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

A silver lining for prospective homebuyers is that the upcoming stage 3 tax reductions will put more money in people's pockets, thus increasing their ability to get loans and eventually, their buying power across the country.

According to Powell, the real estate market in Australia might get an extra increase, although this might be reversed by a reduction in the purchasing power of consumers, as the cost of living increases at a faster rate than salaries. Powell warned that if wage growth remains stagnant, it will lead to an ongoing battle for price and a subsequent decline in demand.

In local Australia, home 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 rate development," Powell stated.

The revamp of the migration system may trigger a decline in local home need, as the brand-new competent visa pathway eliminates the need for migrants to live in local locations for two to three years upon arrival. As a result, an even larger percentage of migrants are likely to converge on cities in pursuit of remarkable employment opportunities, subsequently reducing need in local markets, according to Powell.

According to her, removed regions adjacent to urban centers would retain their appeal for people who can no longer pay for to live in the city, and would likely experience a surge in appeal as a result.