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

A current report by Domain predicts that property costs in various areas of the nation, particularly in Perth, Adelaide, Brisbane, and Sydney, are expected to see substantial boosts in the upcoming financial

Across the combined capitals, home costs are tipped to increase by 4 to 7 per cent, while system prices are prepared for to grow by 3 to 5 percent.

According to the Domain Forecast Report, by the close of the 2025 , the midpoint of Sydney's housing prices is anticipated to surpass $1.7 million, while Perth's will reach $800,000. Meanwhile, Adelaide and Brisbane are poised to breach the $1 million mark, and might have already done so already.

The Gold Coast housing market will also skyrocket to new records, with rates expected to rise by 3 to 6 percent, while the Sunshine Coast is set for a 2 to 5 percent increase.
Domain chief of economics and research Dr Nicola Powell stated the forecast rate of development was modest in a lot of cities compared to price motions in a "strong growth".
" Rates are still increasing but not as quick as what we saw in the past financial year," she stated.

Perth and Adelaide are the exceptions. "Adelaide has resembled a steam train-- you can't stop it," she said. "And Perth just hasn't decreased."

Rental rates for houses are anticipated 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 basic price increase of 3 to 5 percent in regional systems, suggesting a shift towards more economical residential or commercial property alternatives for buyers.
Melbourne's real estate sector differs from the rest, anticipating a modest annual boost of as much as 2% for houses. As a result, the average house rate is projected to support between $1.03 million and $1.05 million, making it the most sluggish and unforeseeable rebound the city has ever experienced.

The Melbourne housing market experienced a prolonged depression from 2022 to 2023, with the average home rate visiting 6.3% - a substantial $69,209 decrease - over a duration of 5 consecutive quarters. According to Powell, even with a positive 2% growth forecast, the city's home prices will just handle to recoup about half of their losses.
House costs in Canberra are prepared for to continue recovering, with a forecasted moderate growth varying from 0 to 4 percent.

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

The projection of impending cost walkings spells bad news for prospective property buyers having a hard time to scrape together a down payment.

"It indicates various things for different kinds of purchasers," 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 might have. Whereas if you're a first-home buyer, it may mean you have to conserve more."

Australia's real estate market remains under considerable stress as families continue to grapple with cost and serviceability limitations amid the cost-of-living crisis, heightened by continual high rates of interest.

The Reserve Bank of Australia has kept the main money rate at a decade-high of 4.35 percent since late last year.

The shortage of new housing supply will continue to be the main motorist of home rates in the short term, the Domain report said. For many years, real estate supply has actually been constrained by scarcity of land, weak building approvals and high building expenses.

In somewhat positive news for prospective purchasers, the stage 3 tax cuts will provide more cash to families, lifting borrowing capacity and, therefore, buying power across the nation.

Powell stated this might even more strengthen Australia's housing market, but may be offset by a decline in real wages, as living costs rise faster than salaries.

"If wage growth remains at its present level we will continue to see extended price and moistened demand," she said.

Throughout rural and suburbs of Australia, the worth of homes and apartment or condos is prepared for to increase at a constant rate over the coming year, with the projection varying from one state to another.

"At the same time, a swelling population, fueled by robust increases of brand-new citizens, offers a considerable increase to the upward trend in residential or commercial property values," Powell stated.

The revamp of the migration system might activate a decrease in local home demand, as the new experienced visa pathway eliminates the need for migrants to reside in regional locations for 2 to 3 years upon arrival. As a result, an even bigger portion of migrants are most likely to converge on cities in pursuit of exceptional job opportunity, subsequently decreasing demand in regional markets, according to Powell.

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