What Will Australian Homes Cost? Predictions for 2024 and 2025

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

Home prices 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 typical house rate will have exceeded $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 typical house rate, if they haven't currently hit 7 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 economist at Domain, kept in mind that the anticipated growth rates are reasonably moderate in most cities compared to previous strong upward patterns. She mentioned 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 costs 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 percent in regional systems, indicating a shift towards more affordable home options for buyers.
Melbourne's realty sector differs from the rest, anticipating a modest annual boost of up to 2% for homes. As a result, the mean house cost is predicted to stabilize between $1.03 million and $1.05 million, making it the most slow and unforeseeable rebound the city has ever experienced.

The Melbourne real estate market experienced a prolonged downturn from 2022 to 2023, with the typical home rate dropping by 6.3% - a considerable $69,209 decline - over a period of five successive quarters. According to Powell, even with a positive 2% growth projection, the city's home costs will just handle to recoup about half of their losses.
Home prices in Canberra are expected to continue recovering, with a predicted moderate growth ranging from 0 to 4 percent.

"According to Powell, the capital city continues to deal with challenges in accomplishing a steady rebound and is expected to experience a prolonged and slow rate of progress."

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

"It indicates various things for various types of buyers," Powell said. "If you're a present resident, prices are expected 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 buyer, it might indicate you need to conserve more."

Australia's housing market remains under considerable stress as families continue to face affordability and serviceability limits amidst the cost-of-living crisis, increased by continual high rates of interest.

The Australian reserve bank has actually kept its benchmark rates of interest at a 10-year peak of 4.35% since the latter part of 2022.

According to the Domain report, the limited availability of new homes will remain the primary element affecting residential or commercial property worths in the future. This is because of an extended scarcity of buildable land, slow construction permit issuance, and elevated building costs, which have actually limited real estate supply for a prolonged duration.

A silver lining for potential homebuyers is that the upcoming phase 3 tax decreases will put more cash in individuals's pockets, therefore increasing their ability to take out loans and ultimately, their purchasing power nationwide.

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.

In regional Australia, house and unit costs are expected to grow moderately over the next 12 months, although the outlook varies between states.

"All at once, a swelling population, sustained by robust increases of brand-new citizens, supplies a considerable increase to the upward trend in residential or commercial property values," Powell stated.

The revamp of the migration system may trigger a decline in local home need, as the new competent visa pathway eliminates the requirement for migrants to live in local areas for two to three years upon arrival. As a result, an even larger portion of migrants are most likely to converge on cities in pursuit of exceptional job opportunity, subsequently decreasing demand in local markets, according to Powell.

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