Predicted House Prices for 2024 and 2025 in Australia
Monday 8th July
As we look ahead to the next financial year, real estate prices across most of Australia are set to continue rising, led by significant gains in Perth, Adelaide, Brisbane, and Sydney. According to a new Domain report, house prices across the combined capitals are expected to increase by 4 to 7 percent, while unit prices are anticipated to grow by 3 to 5 percent.
By the end of the 2025 financial year, the median house price is projected to surpass $1.7 million in Sydney and $800,000 in Perth. Adelaide and Brisbane are on the brink of reaching a $1 million median house price, if they haven’t already hit that mark.
Regional Predictions
Gold Coast: Housing market prices are expected to rise by 3 to 6 percent.
Sunshine Coast: A projected increase of 2 to 5 percent.
Melbourne: Moderate annual growth of up to 2 percent for houses, leaving the median house price between $1.03 million and $1.05 million.
Canberra: Expected growth of 0 to 4 percent.
Key Insights
Domain’s Chief of Economics and Research, Dr. Nicola Powell, notes that while prices are still rising, the rate of growth is more modest compared to the strong upswing seen in previous years. Perth and Adelaide are exceptions, with Adelaide described as unstoppable and Perth maintaining steady growth.
Apartments are also set to become more expensive, with new record prices anticipated in Sydney, Brisbane, Adelaide, Perth, the Gold Coast, and the Sunshine Coast.
Market Trends
The forecast suggests that rental market conditions are easing, with increased availability and a slowdown in rental price growth. This trend provides some relief to tenants who have faced substantial price increases in recent years.
Detailed Forecast
Here’s a detailed forecast of the percentage change in house and unit prices by the end of FY25:
Factors Influencing the Market
Several factors are influencing these predictions:
Rental Demand: The number of prospective tenants per listing has fallen throughout 2024, easing demand pressures.
Migration: Overseas migration has peaked and is expected to decline, aligning with federal government strategies aimed at slowing population growth.
First-Home Ownership: Increased first-home ownership is supported by initiatives like Queensland's doubled first-home buyer grant, the federal Help to Buy scheme, and revised stamp duty concessions.
Challenges and Opportunities
The shortage of new housing supply remains a primary driver of property prices in the short term. Constrained by land scarcity, weak building approvals, and high construction costs, supply issues persist.
However, the stage 3 tax cuts could deliver more money to households, potentially lifting borrowing capacity and buying power. This boost might be offset by rising living costs and stagnant wage growth, impacting affordability and demand.
Regional Outlook
Regional areas close to metropolitan centers remain attractive due to their affordability. However, the overhaul of the migration system could shift demand towards metropolitan areas, affecting regional real estate dynamics.
Conclusion
Australia’s housing market continues to navigate significant challenges and opportunities. While price rises offer potential equity growth for current homeowners, prospective buyers face the challenge of increased affordability pressures. Staying informed and adaptable is crucial in this evolving market landscape.
For more insights and updates, stay tuned to our weekly blog.