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

Realty costs across the majority of the country will continue to rise in the next fiscal year, led by sizeable gains in Perth, Adelaide, Brisbane and Sydney, a brand-new Domain report has anticipated.

Throughout the combined capitals, house rates are tipped to increase by 4 to 7 per cent, while system costs are prepared for to grow by 3 to 5 per cent.

According to the Domain Projection Report, by the close of the 2025 fiscal year, the midpoint of Sydney's real estate prices is anticipated to exceed $1.7 million, while Perth's will reach $800,000. On the other hand, Adelaide and Brisbane are poised to breach the $1 million mark, and may have currently done so by then.

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

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

Apartments are likewise set to end up being more costly in the coming 12 months, with systems in Sydney, Brisbane, Adelaide, Perth, the Gold Coast and the Sunshine Coast to strike brand-new record prices.

Regional units are slated for a total price boost of 3 to 5 per cent, which "says a lot about price in terms of purchasers being steered towards more cost effective property types", Powell stated.
Melbourne's home market remains an outlier, with anticipated moderate annual development of approximately 2 per cent for homes. This will leave the typical house cost at in between $1.03 million and $1.05 million, marking the slowest and most inconsistent healing in the city's history.

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 reduction - over a duration of five consecutive quarters. According to Powell, even with a positive 2% growth forecast, the city's home prices will only handle to recover about half of their losses.
House 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 difficulties in attaining a stable rebound and is expected to experience a prolonged and slow rate of progress."

The forecast of approaching rate hikes spells bad news for potential property buyers struggling to scrape together a deposit.

"It means different things for various kinds of buyers," Powell said. "If you're an existing resident, prices are expected to increase so there is that component that the longer you leave it, the more equity you may have. Whereas if you're a first-home buyer, 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 Reserve Bank of Australia has actually kept the main money rate at a decade-high of 4.35 per cent since late last year.

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

A silver lining for potential homebuyers is that the upcoming stage 3 tax reductions will put more cash in individuals's pockets, consequently increasing their capability to secure 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 acquiring power of consumers, as the cost of living increases at a quicker rate than incomes. Powell cautioned that if wage growth remains stagnant, it will result in a continued struggle for cost and a subsequent reduction in demand.

Across rural and outlying areas of Australia, the value of homes and houses is anticipated to increase at a stable pace over the coming year, with the forecast differing from one state to another.

"At the same time, a growing population propped up by strong migration continues to be the wind in the sail of residential or commercial property price growth," Powell said.

The present 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 remove the reward for migrants to reside in a local location for 2 to 3 years on going into the country.
This will imply that "an even greater proportion of migrants will flock to cities searching for much better task potential customers, therefore dampening demand in the regional sectors", Powell said.

Nevertheless local locations near to metropolitan areas would remain attractive areas for those who have been priced out of the city and would continue to see an influx of demand, she added.