The Australian housing market is set to experience varying levels of price growth, across the markets, state to state and differing depending on the property type too
The following key forecasts, include:
1. Capital City Market: A Mixed Bag
- Sydney are expected to witness low to moderate growth in housing and unit prices, driven by persistent demand in inner-city and established suburbs. However, the pace of price increases is likely to be tempered by the decision during 2025 on interest rates and affordability constraints, especially in more expensive areas.
- House Price Growth: 1-4%
- Unit Price Growth: 2-4%
- Brisbane is projected to see stronger price growth compared to other capital cities, spurred by infrastructure projects, interstate migration, and relative affordability, compared to Sydney. The surge in regional interest will continue to influence housing demand, but inner city suburbs will still be in high demand and will see the highest price appreciation.
- House Price Growth: 5-7%
- Unit Price Growth: 4-6%
- Perth will experience steady to higher price increases, particularly in inner city and suburban areas benefiting from economic growth tied to the mining and resources sectors. Housing affordability in Perth remains favourable compared to eastern capitals, supporting consistent demand.
- House Price Growth: 6-8%
- Unit Price Growth: 3-5%
- Adelaide is likely to continue its trend of stable and moderate price growth, with lower price points attracting buyers seeking affordable options. Increased interest in regional areas may also support steady price gains in metropolitan suburbs.
- House Price Growth: 4-6%
- Unit Price Growth: 3-5%
- Canberra is expected to remain a flat market, with lower demand, across the market. Demand will remain strong for high quality homes. There is continued investment, across the territory in infrastructure projects. High-income earners and government workers will continue to support price stability in the nations capital.
- House Price Growth: 0-3%
- Unit Price Growth: 1-3%
2. Regional and Coastal Areas: Results in Strong Performance
- Regional areas, particularly in New South Wales, Victoria, and Queensland, are expected to perform well, driven by affordability and lifestyle appeal. Towns and cities within commuting distance of major capitals will see significant interest, supporting price increases.
- House Price Growth in Regional Areas: 6-8%
- Unit Price Growth in Regional Areas: 5-8%
- Coastal towns like those along the Sunshine Coast, Gold Coast, and Central Coast will continue to attract buyers seeking a balance of lifestyle and affordability. These areas are expected to experience solid price growth, driven by remote work trends and the desire for outdoor living.
- House Price Growth in Coastal Areas: 5-8%
- Unit Price Growth in Coastal Areas: 4-6%
3. Units vs. Houses: Diverging Trends
- Houses are expected to continue outperforming units in price growth, especially in established and family-friendly suburbs. Demand for larger homes with outdoor areas will remain strong, particularly in a post-pandemic world, where flexible work arrangements are common.
- Units will face a slower price recovery, particularly in inner-city areas with a higher concentration of apartments, where there is an over supply of unit entering the market, in mainly our two largest capital cities, Melbourne and Sydney. However, smaller, well-located units with good amenities, larger land components, strong fundamentals and transport access will see increased interest, particularly among investors and younger buyers priced out of the house market.
Overall Price Predictions for Australia in 2025:
- National House Price Growth: 4-6%
- National Unit Price Growth: 3-5%
The 2025 housing market in Australia, will be characterised by diverse performance across the states, with supply and demand, affordability and lifestyle factors shaping buyer preferences. While the days of double-digit annual growth are behind us, a more sustainable and steady rise in prices is anticipated, reflecting a balanced overall market adapting to economic, social, and policy-driven influences.
The Reserve Bank of Australia (RBA) is expected to maintain a cautious approach to interest rates in 2025, with forecasts suggesting rates will remain neutral or experience minor adjustments depending on inflationary pressures and economic performance with Australia. This small adjustment down could offer some relief to buyers and investors, but the damage from prior rate hikes may already be entrenched in the housing market. High borrowing costs will continue to limit buyer capacity, particularly for first-home buyers and those upgrading to more expensive properties. As a result, house prices are likely to remain subdued, with little room for significant growth.
