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

A current report by Domain anticipates that real estate rates in different regions of the nation, especially in Perth, Adelaide, Brisbane, and Sydney, are expected to see substantial boosts in the upcoming financial

House rates in the significant cities are expected to increase between 4 and 7 percent, with unit to increase by 3 to 5 percent.

By the end of the 2025 fiscal year, the mean house 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 breaking the $1 million average home cost, if they haven't currently strike seven figures.

The housing market in the Gold Coast is expected to reach new highs, with rates 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 primary economic expert at Domain, noted that the anticipated growth rates are fairly moderate in most cities compared to previous strong upward patterns. She discussed that rates 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 revealing no indications of slowing down.

Rental costs for apartments 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 general rate rise of 3 to 5 per cent in local units, showing a shift towards more affordable property choices for buyers.
Melbourne's home market remains an outlier, with anticipated moderate annual development of as much as 2 percent for houses. This will leave the mean house rate at between $1.03 million and $1.05 million, marking the slowest and most irregular recovery in the city's history.

The 2022-2023 slump in Melbourne spanned 5 successive quarters, with the average home cost falling 6.3 per cent or $69,209. Even with the upper forecast of 2 percent growth, Melbourne home prices will just be just under halfway into recovery, Powell said.
Home prices in Canberra are expected to continue recuperating, with a projected moderate development ranging from 0 to 4 percent.

"According to Powell, the capital city continues to face obstacles in accomplishing a stable rebound and is expected to experience an extended and sluggish speed of development."

The projection of approaching rate hikes spells problem for potential homebuyers having a hard time to scrape together a deposit.

"It means different things for various kinds of buyers," Powell said. "If you're an existing homeowner, costs are anticipated to rise so there is that aspect that the longer you leave it, the more equity you may have. Whereas if you're a first-home buyer, it might indicate you need to save more."

Australia's housing market remains under substantial pressure as households continue to grapple with cost and serviceability limitations in the middle of the cost-of-living crisis, heightened by sustained high rate of interest.

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

According to the Domain report, the restricted schedule of new homes will remain the main factor influencing residential or commercial property worths in the future. This is due to a prolonged lack of buildable land, slow building authorization issuance, and elevated building costs, which have actually limited real estate supply for a prolonged period.

A silver lining for possible property buyers 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 may receive an additional boost, although this might be counterbalanced by a reduction in the buying power of consumers, as the cost of living increases at a faster rate than salaries. Powell alerted that if wage development stays stagnant, it will cause an ongoing battle for price and a subsequent decline in demand.

In local Australia, home and unit prices are anticipated to grow reasonably 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 rate development," Powell stated.

The existing overhaul of the migration system might cause a drop in need for local property, with the intro of a brand-new stream of knowledgeable visas to get rid of the reward for migrants to reside in a local location for 2 to 3 years on going into the nation.
This will indicate that "an even higher percentage of migrants will flock to cities looking for much better task potential customers, hence moistening need in the local sectors", Powell stated.

According to her, distant regions adjacent to urban centers would maintain their appeal for people who can no longer manage to reside in the city, and would likely experience a rise in popularity as a result.