2024 and 2025 House Cost Forecasts in Australia: An Expert Analysis

A current 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 costs are tipped to increase by 4 to 7 percent, while unit rates are expected to grow by 3 to 5 per cent.

By the end of the 2025 fiscal year, the mean home rate will have surpassed $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 cracking the $1 million typical house rate, if they haven't currently hit 7 figures.

The real estate market in the Gold Coast is expected to reach brand-new highs, with prices 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 chief financial expert at Domain, noted that the anticipated growth rates are fairly 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 signs of slowing down.

Rental rates for houses are anticipated to increase in the next year, reaching all-time highs in Sydney, Brisbane, Adelaide, Perth, the Gold Coast, and the Sunshine Coast.

According to Powell, there will be a general cost increase of 3 to 5 per cent in local systems, indicating a shift towards more affordable home options for purchasers.
Melbourne's real estate sector differs from the rest, preparing for a modest yearly increase of as much as 2% for houses. As a result, the median house cost is predicted to stabilize between $1.03 million and $1.05 million, making it the most slow and unpredictable rebound the city has ever experienced.

The Melbourne housing market experienced an extended depression from 2022 to 2023, with the average house cost stopping by 6.3% - a significant $69,209 decrease - over a duration of 5 consecutive quarters. According to Powell, even with an optimistic 2% growth forecast, the city's home prices will only handle to recover about half of their losses.
Home rates in Canberra are anticipated to continue recuperating, with a predicted mild growth varying from 0 to 4 percent.

"According to Powell, the capital city continues to deal with obstacles in achieving a stable rebound and is anticipated to experience an extended and slow pace of progress."

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

"It suggests different things for different types of buyers," Powell stated. "If you're an existing resident, 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 may suggest you need to save more."

Australia's housing market remains under considerable pressure as households continue to come to grips with price and serviceability limitations in the middle of the cost-of-living crisis, increased by continual high rate of interest.

The Australian reserve 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 minimal schedule of brand-new homes will stay the main aspect affecting home worths in the future. This is because of an extended scarcity of buildable land, slow building and construction permit issuance, and elevated building expenses, which have limited housing supply for an extended period.

A silver lining for possible property buyers is that the approaching phase 3 tax decreases will put more cash in individuals's pockets, thus increasing their ability to get loans and ultimately, their purchasing power nationwide.

According to Powell, the housing market in Australia might get an extra increase, although this might be reversed by a reduction in the buying power of consumers, as the expense of living boosts at a faster rate than wages. Powell alerted that if wage development stays stagnant, it will result in an ongoing struggle for affordability and a subsequent decrease in demand.

In regional Australia, home and system prices are expected 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 home rate development," Powell stated.

The revamp of the migration system might set off a decline in regional home need, as the brand-new competent visa pathway eliminates the need for migrants to live in local locations for two to three years upon arrival. As a result, an even larger percentage of migrants are likely to converge on cities in pursuit of remarkable job opportunity, consequently decreasing demand in regional markets, according to Powell.

According to her, outlying areas adjacent to city centers would keep their appeal for individuals who can no longer afford to reside in the city, and would likely experience a rise in popularity as a result.