What to Anticipate: Australian Property Costs in 2024 and 2025

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

Throughout the combined capitals, home prices are tipped to increase by 4 to 7 percent, while unit costs are anticipated to grow by 3 to 5 percent.

By the end of the 2025 fiscal year, the median home rate will have surpassed $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 breaking the $1 million average home rate, if they have not already 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 chief financial expert at Domain, noted that the anticipated growth rates are fairly moderate in the majority of 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 showing 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.

According to Powell, there will be a general rate rise of 3 to 5 percent in local units, showing a shift towards more budget-friendly residential or commercial property alternatives 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 typical house cost is predicted to stabilize in between $1.03 million and $1.05 million, making it the most slow and unpredictable rebound the city has ever experienced.

The Melbourne housing market experienced an extended depression from 2022 to 2023, with the average 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 prices will only handle to recover about half of their losses.
House costs in Canberra are prepared for to continue recovering, with a forecasted moderate development varying from 0 to 4 percent.

"According to Powell, the capital city continues to deal with obstacles in achieving a stable rebound and is anticipated to experience a prolonged and sluggish speed of development."

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

According to Powell, the implications vary depending upon the kind of purchaser. For existing house owners, delaying a decision may result in increased equity as costs are predicted to climb up. On the other hand, first-time buyers might need to set aside more funds. On the other hand, Australia's real estate market is still having a hard time due to price and payment capacity concerns, exacerbated by the ongoing cost-of-living crisis and high rate of interest.

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

The lack of new real estate supply will continue to be the primary motorist of home rates in the short-term, the Domain report stated. For years, housing supply has been constrained by scarcity of land, weak building approvals and high construction costs.

In rather favorable news for potential purchasers, the stage 3 tax cuts will provide more cash to families, raising borrowing capacity and, for that reason, purchasing power throughout the nation.

According to Powell, the housing market in Australia may receive an additional increase, although this might be reversed by a decrease in the purchasing power of consumers, as the cost of living increases at a faster rate than salaries. Powell warned that if wage growth stays stagnant, it will cause an ongoing battle for price and a subsequent decline in demand.

Across rural and outlying areas of Australia, the value of homes and apartments is anticipated to increase at a steady pace over the coming year, with the projection varying from one state to another.

"At the same time, a growing population propped up by strong migration continues to be the wind in the sail of home rate development," Powell stated.

The current overhaul of the migration system could cause a drop in need for local realty, with the introduction of a new stream of skilled visas to eliminate the incentive for migrants to live in a regional area for 2 to 3 years on going into the country.
This will mean that "an even greater proportion of migrants will flock to cities searching for much better job prospects, thus dampening need in the local sectors", Powell stated.

Nevertheless local areas close to cities would remain attractive locations for those who have actually been evaluated of the city and would continue to see an increase of demand, she added.