Australian Housing Market Outlook: Rate Forecasts for 2024 and 2025

A recent report by Domain forecasts that property rates in different areas of the nation, particularly in Perth, Adelaide, Brisbane, and Sydney, are anticipated to see significant boosts in the upcoming financial

Home costs in the significant cities are expected to increase between 4 and 7 percent, with system to increase by 3 to 5 percent.

By the end of the 2025 financial year, the median home price 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 median home price, if they have not already strike 7 figures.

The housing market in the Gold Coast is anticipated to reach new highs, with rates projected to increase by 3 to 6 percent, while the Sunlight Coast is anticipated to see an increase of 2 to 5 percent. Dr. Nicola Powell, the primary economic expert at Domain, kept in mind that the expected development rates are relatively moderate in a lot of cities compared to previous strong upward trends. She discussed that prices are still increasing, albeit at a slower than in the previous financial. The cities of Perth and Adelaide are exceptions to this pattern, with Adelaide halted, and Perth showing 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 Sunlight Coast.

According to Powell, there will be a general cost rise of 3 to 5 percent in regional units, showing a shift towards more budget-friendly home options for purchasers.
Melbourne's home market remains an outlier, with expected moderate yearly growth of approximately 2 per cent for houses. This will leave the typical house cost at in between $1.03 million and $1.05 million, marking the slowest and most inconsistent recovery in the city's history.

The 2022-2023 slump in Melbourne covered five successive quarters, with the typical home rate falling 6.3 per cent or $69,209. Even with the upper projection of 2 percent growth, Melbourne house costs will just be simply under midway into recovery, Powell said.
Canberra home rates are also anticipated to stay in recovery, although the forecast development is moderate at 0 to 4 per cent.

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

With more price rises on the horizon, the report is not motivating news for those attempting to save for a deposit.

"It suggests different things for various kinds of purchasers," Powell stated. "If you're an existing home owner, prices are expected 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 purchaser, it might mean you have to save more."

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

The Reserve Bank of Australia has kept the official cash rate at a decade-high of 4.35 percent considering that late in 2015.

The shortage of new housing supply will continue to be the main chauffeur of residential or commercial property rates in the short-term, the Domain report stated. For several years, real estate supply has actually been constrained by shortage of land, weak building approvals and high building costs.

In somewhat positive news for prospective buyers, the stage 3 tax cuts will provide more cash to families, raising borrowing capacity and, for that reason, purchasing power throughout the nation.

Powell said this could further bolster Australia's housing market, but may be offset by a decline in real wages, as living costs rise faster than wages.

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

Across rural and outlying areas of Australia, the value of homes and apartments is prepared for to increase at a constant rate over the coming year, with the projection varying from one state to another.

"All at once, a swelling population, sustained by robust increases of brand-new locals, offers a considerable boost to the upward trend in home worths," Powell specified.

The revamp of the migration system might activate a decrease in regional home need, as the brand-new competent visa pathway eliminates the requirement for migrants to reside in regional areas for 2 to 3 years upon arrival. As a result, an even bigger portion of migrants are most likely to converge on cities in pursuit of remarkable job opportunity, consequently minimizing need in regional markets, according to Powell.

However regional areas close to metropolitan areas would stay appealing areas for those who have actually been priced out of the city and would continue to see an influx of demand, she included.