What's Next for Australian Property? A Look at 2024 and 2025 Home Rates

A recent report by Domain forecasts that real estate rates 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 per cent.

By the end of the 2025 financial year, the mean house cost 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 cost, if they haven't already strike seven 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 prepared for to see a rise of 2 to 5 percent. Dr. Nicola Powell, the primary financial expert at Domain, noted that the anticipated growth rates are fairly moderate in the majority 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 signs of decreasing.

Apartments are likewise set to end up being more expensive in the coming 12 months, with systems in Sydney, Brisbane, Adelaide, Perth, the Gold Coast and the Sunlight Coast to hit brand-new record rates.

Regional systems are slated for an overall cost boost of 3 to 5 per cent, which "says a lot about price in terms of buyers being guided towards more inexpensive residential or commercial property types", Powell stated.
Melbourne's home market remains an outlier, with expected moderate yearly development of up to 2 percent for homes. This will leave the median house rate at between $1.03 million and $1.05 million, marking the slowest and most inconsistent 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 house costs will just be just under halfway into healing, Powell stated.
Canberra home rates are also expected to stay in healing, although the forecast growth is mild at 0 to 4 percent.

"The country's capital has actually had a hard time to move into an established recovery and will follow a likewise sluggish trajectory," Powell stated.

With more rate increases on the horizon, the report is not encouraging news for those trying to save for a deposit.

"It suggests different things for different types of purchasers," Powell stated. "If you're an existing home owner, prices are anticipated to increase so there is that component that the longer you leave it, the more equity you may have. Whereas if you're a first-home purchaser, it might imply you have to conserve more."

Australia's real estate market stays under substantial strain as households continue to come to grips with cost and serviceability limitations in the middle of the cost-of-living crisis, heightened by sustained high interest rates.

The Reserve Bank of Australia has kept the main money 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 been constrained by scarcity of land, weak building approvals and high construction costs.

A silver lining for prospective property buyers is that the approaching phase 3 tax decreases will put more cash in individuals's pockets, consequently increasing their capability to get loans and eventually, their buying power across the country.

According to Powell, the real estate market in Australia might get an extra increase, although this might be reversed by a reduction in the buying power of consumers, as the cost of living increases at a faster rate than salaries. Powell warned that if wage growth stays stagnant, it will cause an ongoing battle for price and a subsequent decline in demand.

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

"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 present overhaul of the migration system could cause a drop in demand for regional real estate, with the intro of a new stream of skilled visas to get rid of the reward for migrants to reside in a regional location for 2 to 3 years on going into the country.
This will suggest that "an even higher proportion of migrants will flock to cities searching for better job prospects, thus moistening need in the local sectors", Powell said.

Nevertheless local locations near cities would remain attractive locations for those who have been evaluated of the city and would continue to see an increase of need, she added.