Where Are Australian House Costs Headed? Forecasts for 2024 and 2025

A current report by Domain predicts that property prices in numerous regions of the nation, especially in Perth, Adelaide, Brisbane, and Sydney, are expected to see considerable increases in the upcoming monetary

Across the combined capitals, home prices 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 average home 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 mean house cost, if they haven't currently hit 7 figures.

The housing market in the Gold Coast is anticipated to reach new highs, with rates projected to increase by 3 to 6 percent, while the Sunlight Coast is anticipated to see an increase of 2 to 5 percent. Dr. Nicola Powell, the primary economic expert at Domain, kept in mind that the anticipated development rates are fairly moderate in the majority of cities compared to previous strong upward trends. 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 decreasing.

Houses are likewise set to become more costly in the coming 12 months, with systems in Sydney, Brisbane, Adelaide, Perth, the Gold Coast and the Sunshine Coast to strike new record costs.

Regional units are slated for a total cost boost of 3 to 5 per cent, which "states a lot about affordability in regards to buyers being steered towards more inexpensive home types", Powell said.
Melbourne's residential or commercial property market stays an outlier, with expected moderate yearly growth of as much as 2 percent for houses. This will leave the mean house cost at in between $1.03 million and $1.05 million, marking the slowest and most inconsistent recovery in the city's history.

The 2022-2023 decline in Melbourne spanned 5 successive quarters, with the average home rate falling 6.3 per cent or $69,209. Even with the upper projection of 2 percent growth, Melbourne house rates will only be just under midway into healing, Powell said.
Canberra house costs are likewise expected to remain in healing, although the projection growth is mild at 0 to 4 percent.

"The nation's capital has had a hard time to move into a recognized recovery and will follow a similarly sluggish trajectory," Powell stated.

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

"It indicates various things for different types of buyers," 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 might have. Whereas if you're a first-home buyer, it might indicate you need to save more."

Australia's housing market stays under substantial strain as households continue to come to grips with cost and serviceability limitations amid the cost-of-living crisis, heightened by sustained high rate of interest.

The Reserve Bank of Australia has kept the official money rate at a decade-high of 4.35 percent given that late in 2015.

The scarcity of brand-new real estate supply will continue to be the main driver of residential or commercial property costs in the short-term, the Domain report stated. For several years, housing supply has been constrained by scarcity of land, weak building approvals and high building expenses.

In rather favorable news for prospective buyers, the stage 3 tax cuts will deliver more money to households, lifting borrowing capacity and, therefore, buying power across the country.

Powell said this could further reinforce Australia's housing market, but may be balanced out by a decrease in real wages, as living expenses increase faster than earnings.

"If wage development remains at its existing level we will continue to see extended price and moistened need," she stated.

Across rural and outlying areas of Australia, the value of homes and houses is expected to increase at a stable speed over the coming year, with the forecast differing from one state to another.

"At the same time, a swelling population, fueled by robust influxes of new residents, provides a significant boost to the upward pattern in home worths," Powell mentioned.

The revamp of the migration system may trigger a decline in local home need, as the brand-new proficient visa path gets rid of the need for migrants to reside in regional locations for 2 to 3 years upon arrival. As a result, an even bigger percentage of migrants are likely to converge on cities in pursuit of superior employment opportunities, consequently lowering need in local markets, according to Powell.

However regional areas near cities would stay attractive locations for those who have been evaluated of the city and would continue to see an increase of need, she added.