What's Next for Australian Real Estate? A Take a look at 2024 and 2025 Home Prices

A current report by Domain predicts that realty prices in different regions of the nation, particularly in Perth, Adelaide, Brisbane, and Sydney, are anticipated to see significant boosts in the upcoming financial

Throughout the combined capitals, house costs are tipped to increase by 4 to 7 percent, while unit rates are expected to grow by 3 to 5 percent.

By the end of the 2025 fiscal year, the median house 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 breaking the $1 million mean 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 expected to see an increase of 2 to 5 percent. Dr. Nicola Powell, the chief 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 rates 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.

Rental prices for apartment or condos are expected 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 regional systems, indicating a shift towards more affordable home options for buyers.
Melbourne's property sector stands apart from the rest, expecting a modest annual increase of up to 2% for homes. As a result, the typical house cost is forecasted to support between $1.03 million and $1.05 million, making it the most sluggish and unforeseeable rebound the city has actually ever experienced.

The Melbourne real estate market experienced an extended slump from 2022 to 2023, with the average home rate dropping by 6.3% - a significant $69,209 reduction - over a duration of five consecutive quarters. According to Powell, even with an optimistic 2% development forecast, the city's house prices will just handle to recover about half of their losses.
Canberra house costs are likewise anticipated to remain in recovery, although the forecast development is moderate at 0 to 4 per cent.

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

The projection of upcoming price hikes spells problem for potential property buyers struggling to scrape together a down payment.

According to Powell, the ramifications differ depending upon the type of buyer. For existing homeowners, delaying a decision might lead to increased equity as rates are predicted to climb. In contrast, first-time buyers might require to reserve more funds. On the other hand, Australia's real estate market is still having a hard time due to affordability and repayment capacity concerns, intensified by the ongoing cost-of-living crisis and high rate of interest.

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

According to the Domain report, the restricted schedule of brand-new homes will stay the main element affecting home worths in the future. This is because of an extended scarcity of buildable land, slow building and construction authorization issuance, and raised building expenses, which have limited real estate supply for a prolonged duration.

A silver lining for possible property buyers is that the approaching phase 3 tax decreases will put more cash in individuals's pockets, therefore increasing their capability to secure 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 customers, as the cost of living increases at a quicker rate than incomes. Powell warned that if wage growth remains stagnant, it will lead to a continued battle for price and a subsequent decline in demand.

In local Australia, home and system costs are anticipated to grow moderately 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 current overhaul of the migration system might lead to a drop in demand for local property, with the intro of a new stream of competent visas to remove the incentive for migrants to reside in a local location for two to three years on getting in the nation.
This will indicate that "an even higher proportion of migrants will flock to metropolitan areas in search of much better task potential customers, thus dampening need in the local sectors", Powell stated.

According to her, outlying areas adjacent to city centers would retain their appeal for people who can no longer manage to reside in the city, and would likely experience a surge in popularity as a result.