Australia's Housing Market Projection: Price Predictions for 2024 and 2025

A recent 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 median home price will have gone beyond $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 breaking the $1 million typical house rate, if they haven't currently hit 7 figures.

The housing market in the Gold Coast is anticipated to reach new highs, with costs predicted 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 financial expert at Domain, noted that the anticipated growth rates are fairly moderate in most cities compared to previous strong upward trends. She pointed out that prices 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 showing no indications of slowing down.

Rental rates for apartments 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 rate rise of 3 to 5 per cent in local units, suggesting a shift towards more economical property choices for purchasers.
Melbourne's real estate sector differs from the rest, preparing for a modest yearly increase of approximately 2% for residential properties. As a result, the average home rate is projected to support between $1.03 million and $1.05 million, making it the most slow and unforeseeable rebound the city has ever experienced.

The Melbourne housing market experienced a prolonged depression from 2022 to 2023, with the typical house cost stopping by 6.3% - a substantial $69,209 decrease - over a period of 5 successive quarters. According to Powell, even with an optimistic 2% growth forecast, the city's home rates will only manage to recover about half of their losses.
Canberra home rates are also expected to stay in healing, although the forecast growth is mild at 0 to 4 percent.

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

The projection of upcoming rate walkings spells bad news for prospective homebuyers struggling to scrape together a down payment.

According to Powell, the implications vary depending upon the kind of purchaser. For existing house owners, postponing a choice might lead to increased equity as prices are projected to climb. In contrast, first-time buyers might need to set aside more funds. Meanwhile, Australia's real estate market is still having a hard time due to cost and payment capability issues, worsened by the continuous cost-of-living crisis and high rates of interest.

The Australian central bank has 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 accessibility of new homes will remain the primary factor influencing property values in the near future. This is due to a prolonged shortage of buildable land, sluggish construction permit issuance, and raised structure expenditures, which have actually limited real estate supply for a prolonged duration.

In rather favorable news for potential purchasers, the stage 3 tax cuts will deliver more money to homes, lifting borrowing capacity and, therefore, buying power across the country.

Powell said this could further bolster Australia's housing market, but might be balanced out by a decrease in real wages, as living expenses increase faster than earnings.

"If wage growth stays at its current level we will continue to see stretched affordability and dampened need," she stated.

Throughout rural and suburbs of Australia, the worth of homes and apartment or condos is expected to increase at a stable pace over the coming year, with the forecast varying from one state to another.

"At the same time, a swelling population, fueled by robust increases of brand-new citizens, provides a substantial increase to the upward pattern in property values," Powell specified.

The present overhaul of the migration system could cause a drop in need for regional real estate, with the intro of a new stream of skilled visas to get rid of the reward for migrants to live in a local location for 2 to 3 years on going into the country.
This will suggest that "an even higher percentage of migrants will flock to metropolitan areas in search of much better task potential customers, hence moistening demand in the regional sectors", Powell said.

According to her, outlying regions adjacent to metropolitan centers would keep 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.