Australia's Housing Market Forecast: Rate Predictions for 2024 and 2025

A current report by Domain anticipates that real estate costs in various areas of the country, especially in Perth, Adelaide, Brisbane, and Sydney, are expected to see substantial increases in the upcoming monetary

Across the combined capitals, home prices are tipped to increase by 4 to 7 percent, while unit 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 median home price, if they have not already hit 7 figures.

The real estate market in the Gold Coast is anticipated to reach new highs, with rates projected to increase by 3 to 6 percent, while the Sunlight Coast is prepared for to see a rise of 2 to 5 percent. Dr. Nicola Powell, the primary economist at Domain, noted that the anticipated development rates are relatively moderate in a lot of cities compared to previous strong upward trends. 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 revealing no indications of slowing down.

Rental prices for houses are anticipated 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 general rate rise of 3 to 5 percent in local units, suggesting a shift towards more economical property alternatives for buyers.
Melbourne's property sector stands apart from the rest, expecting a modest annual increase of as much as 2% for residential properties. As a result, the average home price is forecasted to support in between $1.03 million and $1.05 million, making it the most sluggish and unforeseeable rebound the city has ever experienced.

The Melbourne real estate market experienced an extended slump from 2022 to 2023, with the average home rate visiting 6.3% - a considerable $69,209 decline - over a period of five successive quarters. According to Powell, even with a positive 2% growth projection, the city's home rates will only manage to recover about half of their losses.
House costs in Canberra are prepared for to continue recuperating, with a projected moderate development ranging from 0 to 4 percent.

"According to Powell, the capital city continues to face difficulties in accomplishing a steady rebound and is expected to experience a prolonged and sluggish speed of development."

The projection of impending price hikes spells problem for potential homebuyers struggling to scrape together a down payment.

According to Powell, the ramifications differ depending on the type of buyer. For existing property owners, postponing a choice might result in increased equity as prices are projected to climb. On the other hand, newbie purchasers may need to set aside more funds. Meanwhile, Australia's housing market is still having a hard time due to price and payment capability issues, exacerbated by the ongoing cost-of-living crisis and high rate of interest.

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 limited availability of new homes will remain the primary element influencing residential or commercial property worths in the future. This is because of an extended scarcity of buildable land, slow building and construction authorization issuance, and raised building expenses, which have restricted housing supply for an extended period.

In somewhat positive news for prospective buyers, the stage 3 tax cuts will deliver more money to homes, 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 development remains at its present level we will continue to see extended cost and moistened need," she said.

Throughout rural and suburbs of Australia, the value of homes and houses is expected to increase at a stable pace over the coming year, with the forecast differing from one state to another.

"All at once, a swelling population, sustained by robust increases of brand-new citizens, offers a considerable boost to the upward trend in property values," Powell stated.

The revamp of the migration system may set off a decline in regional 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 most likely to converge on cities in pursuit of remarkable job opportunity, subsequently decreasing demand in regional markets, according to Powell.

Nevertheless local areas close to metropolitan areas 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.