The Future of Australian Real Estate: House Cost Forecasts for 2024 and 2025

A recent report by Domain anticipates that real estate costs in various areas of the country, especially in Perth, Adelaide, Brisbane, and Sydney, are anticipated to see considerable increases in the upcoming financial

Home prices in the significant cities are expected to increase between 4 and 7 percent, with unit to increase by 3 to 5 percent.

By the end of the 2025 financial year, the mean home cost 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 average home price, if they have not already hit 7 figures.

The real estate market in the Gold Coast is expected to reach new highs, with rates projected to increase by 3 to 6 percent, while the Sunlight Coast is anticipated to see a rise of 2 to 5 percent. Dr. Nicola Powell, the primary economist at Domain, kept in mind that the anticipated growth 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 pattern, with Adelaide halted, and Perth showing no indications of decreasing.

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 Sunshine Coast.

According to Powell, there will be a general cost increase of 3 to 5 per cent in regional systems, suggesting a shift towards more budget-friendly property options 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 price is forecasted to support between $1.03 million and $1.05 million, making it the most slow and unforeseeable rebound the city has ever experienced.

The Melbourne housing market experienced a prolonged downturn from 2022 to 2023, with the typical house cost coming by 6.3% - a significant $69,209 reduction - over a duration of 5 consecutive quarters. According to Powell, even with an optimistic 2% development forecast, the city's home prices will only handle to recover about half of their losses.
Home rates in Canberra are anticipated 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 expected to experience an extended and slow rate of progress."

The projection of upcoming price hikes spells problem for potential property buyers struggling to scrape together a down payment.

According to Powell, the ramifications vary depending on the type of purchaser. For existing house owners, postponing a decision may result in increased equity as prices are forecasted to climb up. On the other hand, newbie purchasers 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 repayment capacity concerns, intensified by the continuous cost-of-living crisis and high rates of interest.

The Australian central bank has preserved its benchmark rate of interest at a 10-year peak of 4.35% given that the latter part of 2022.

According to the Domain report, the restricted accessibility of brand-new homes will stay the main aspect affecting home worths in the future. This is because of an extended scarcity of buildable land, slow building and construction authorization issuance, and raised structure expenditures, which have actually limited real estate supply for a prolonged duration.

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.

Powell said this could further bolster Australia's housing market, but may be offset by a decline in real wages, as living costs rise faster than wages.

"If wage growth stays at its current level we will continue to see stretched affordability and dampened demand," she said.

In local Australia, home and system costs are expected to grow moderately over the next 12 months, although the outlook varies between states.

"All at once, a swelling population, sustained by robust increases of brand-new citizens, offers a considerable boost to the upward trend in property values," Powell stated.

The revamp of the migration system may trigger a decline in regional home need, as the brand-new competent visa pathway eliminates the requirement for migrants to live in local areas for two to three years upon arrival. As a result, an even larger portion 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.