Forecasting Australian Realty: Home Prices for 2024 and 2025

A current report by Domain predicts that property costs in numerous regions 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 rates are anticipated to grow by 3 to 5 percent.

According to the Domain Projection Report, by the close of the 2025 fiscal year, the midpoint of Sydney's real estate costs is anticipated to surpass $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 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 prepared for to see a rise of 2 to 5 percent. Dr. Nicola Powell, the primary economist at Domain, noted that the anticipated growth rates are reasonably moderate in most cities compared to previous strong upward patterns. She pointed out that costs are still increasing, albeit at a slower than in the previous monetary. The cities of Perth and Adelaide are exceptions to this trend, with Adelaide halted, and Perth revealing no indications of slowing down.

Rental prices for homes 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 basic price increase of 3 to 5 per cent in regional systems, indicating a shift towards more affordable home options for buyers.
Melbourne's home market remains an outlier, with anticipated moderate yearly growth of as much as 2 percent for houses. This will leave the average home price at between $1.03 million and $1.05 million, marking the slowest and most irregular healing in the city's history.

The 2022-2023 recession in Melbourne covered 5 consecutive quarters, with the mean home price falling 6.3 per cent or $69,209. Even with the upper projection of 2 percent growth, Melbourne home rates will just be just under midway into healing, Powell said.
Canberra home rates are also expected to stay in healing, although the projection growth is mild at 0 to 4 percent.

"The country's capital has struggled to move into a recognized healing and will follow a likewise slow trajectory," Powell said.

The forecast of approaching rate hikes spells bad news for prospective property buyers having a hard time to scrape together a down payment.

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

Australia's housing market remains under considerable stress as homes continue to face price and serviceability limitations amid the cost-of-living crisis, heightened by sustained high rate of interest.

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

According to the Domain report, the minimal schedule of brand-new homes will stay the main aspect influencing property values in the near future. This is due to an extended scarcity of buildable land, slow building and construction permit issuance, and elevated building expenses, which have limited real estate supply for a prolonged duration.

A silver lining for prospective homebuyers is that the upcoming stage 3 tax reductions will put more money in people's pockets, thereby increasing their ability to take out loans and ultimately, their purchasing power nationwide.

According to Powell, the housing market in Australia may receive an additional increase, although this might be reversed by a decline in the acquiring power of customers, as the expense of living boosts at a quicker rate than incomes. Powell warned that if wage growth remains stagnant, it will lead to an ongoing battle for price and a subsequent reduction in demand.

In regional Australia, house and unit rates 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 residential or commercial property cost growth," Powell said.

The revamp of the migration system may activate a decrease in regional residential or commercial property demand, as the new knowledgeable visa path gets rid of the need for migrants to live in local areas for 2 to 3 years upon arrival. As a result, an even bigger portion of migrants are likely to converge on cities in pursuit of superior employment opportunities, consequently minimizing need in regional markets, according to Powell.

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