Australian Housing Market Outlook: Rate Forecasts for 2024 and 2025

A recent report by Domain forecasts that real estate rates in different regions of the nation, particularly in Perth, Adelaide, Brisbane, and Sydney, are anticipated to see considerable boosts in the upcoming financial

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

By the end of the 2025 fiscal year, the average home price will have gone beyond $1.7 million in Sydney and $800,000 in Perth, according to the Domain Forecast Report. Adelaide and Brisbane will be on the cusp of splitting the $1 million median home price, if they have not already strike seven 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 chief economic expert at Domain, noted that the expected development rates are fairly moderate in most cities compared to previous strong upward trends. She pointed out that prices 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 indications 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.

Regional units are slated for a general rate increase of 3 to 5 percent, which "says a lot about cost in regards to buyers being guided towards more inexpensive home types", Powell said.
Melbourne's home market remains an outlier, with anticipated moderate yearly growth of approximately 2 per cent for houses. This will leave the typical house cost at in between $1.03 million and $1.05 million, marking the slowest and most inconsistent healing in the city's history.

The Melbourne housing market experienced an extended depression from 2022 to 2023, with the average home price coming by 6.3% - a significant $69,209 reduction - over a duration of five consecutive quarters. According to Powell, even with a positive 2% growth forecast, the city's home prices will only handle to recoup about half of their losses.
Home prices in Canberra are expected to continue recuperating, with a projected mild development varying 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 pace of progress."

The forecast of approaching cost walkings spells bad news for prospective property buyers having a hard time to scrape together a deposit.

According to Powell, the ramifications differ depending on the type of buyer. For existing property owners, postponing a choice might result in increased equity as prices are forecasted to climb up. On the other hand, newbie buyers might need to reserve more funds. Meanwhile, Australia's housing market is still having a hard time due to affordability and repayment capability concerns, intensified by the continuous cost-of-living crisis and high rates of interest.

The Australian reserve bank has maintained its benchmark rate of interest at a 10-year peak of 4.35% because the latter part of 2022.

According to the Domain report, the restricted accessibility of brand-new homes will stay the main aspect affecting property values in the near future. This is due to a prolonged lack of buildable land, sluggish construction license issuance, and elevated structure costs, which have actually limited real estate supply for a prolonged duration.

In rather positive news for prospective purchasers, the stage 3 tax cuts will provide more cash to homes, lifting borrowing capacity and, for that reason, purchasing power throughout the nation.

Powell said this could further boost Australia's real estate market, however may be offset by a decline in real wages, as living costs increase faster than incomes.

"If wage development remains at its existing level we will continue to see extended 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.

"Concurrently, a swelling population, sustained by robust increases of brand-new citizens, offers a considerable increase to the upward pattern in residential or commercial property values," Powell specified.

The revamp of the migration system may trigger a decline in regional property need, as the brand-new knowledgeable visa path removes the requirement for migrants to live in local locations for 2 to 3 years upon arrival. As a result, an even larger percentage of migrants are likely to converge on cities in pursuit of superior job opportunity, consequently lowering need in local markets, according to Powell.

According to her, far-flung areas adjacent to urban 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.