The Future of Australian Realty: Home Price Predictions for 2024 and 2025

Property prices throughout most of the country will continue to rise in the next fiscal year, led by sizeable gains in Perth, Adelaide, Brisbane and Sydney, a brand-new Domain report has anticipated.

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

According to the Domain Projection Report, by the close of the 2025 , the midpoint of Sydney's housing prices is anticipated to go beyond $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 currently done so by then.

The housing market in the Gold Coast is expected to reach new highs, with rates projected to increase by 3 to 6 percent, while the Sunshine Coast is expected to see an increase of 2 to 5 percent. Dr. Nicola Powell, the primary economist at Domain, noted that the anticipated development rates are relatively moderate in many cities compared to previous strong upward trends. She pointed out that rates are still increasing, albeit at a slower than in the previous financial. The cities of Perth and Adelaide are exceptions to this trend, with Adelaide halted, and Perth showing no indications of decreasing.

Apartments are also set to become more costly in the coming 12 months, with systems in Sydney, Brisbane, Adelaide, Perth, the Gold Coast and the Sunlight Coast to strike new record prices.

Regional systems are slated for a total rate boost of 3 to 5 percent, which "says a lot about affordability in terms of buyers being guided towards more affordable property types", Powell said.
Melbourne's property sector differs from the rest, preparing for a modest annual boost of approximately 2% for houses. As a result, the typical home rate is predicted to support in between $1.03 million and $1.05 million, making it the most sluggish and unpredictable rebound the city has ever experienced.

The 2022-2023 slump in Melbourne spanned five consecutive quarters, with the average house cost falling 6.3 per cent or $69,209. Even with the upper projection of 2 percent development, Melbourne home costs will only be just under halfway into recovery, Powell said.
Canberra home costs are also anticipated to remain in recovery, although the projection development is moderate at 0 to 4 per cent.

"The country's capital has actually had a hard time to move into an established recovery and will follow a likewise sluggish trajectory," Powell said.

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

According to Powell, the implications vary depending upon the kind of buyer. For existing property owners, delaying a choice might result in increased equity as costs are projected to climb up. In contrast, novice purchasers may need to reserve more funds. On the other hand, Australia's real estate market is still struggling due to cost and repayment capacity issues, intensified by the continuous cost-of-living crisis and high rate of interest.

The Reserve Bank of Australia has kept the official money rate at a decade-high of 4.35 per cent considering that late last year.

The shortage of brand-new real estate supply will continue to be the main driver of home prices in the short-term, the Domain report said. For several years, housing supply has actually been constrained by scarcity of land, weak structure approvals and high construction expenses.

In rather favorable news for prospective purchasers, the stage 3 tax cuts will deliver more money to families, lifting borrowing capacity and, therefore, purchasing power across the nation.

According to Powell, the real estate market in Australia might receive an extra increase, although this might be counterbalanced by a decrease in the purchasing power of consumers, as the expense of living boosts at a faster rate than incomes. Powell alerted that if wage growth remains stagnant, it will cause an ongoing struggle for cost and a subsequent reduction in demand.

Throughout rural and suburbs of Australia, the value of homes and houses is expected to increase at a constant rate over the coming year, with the forecast differing 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 growth," Powell said.

The existing overhaul of the migration system could lead to a drop in demand for regional property, with the intro of a brand-new stream of skilled visas to remove the incentive for migrants to live in a regional area for two to three years on getting in the nation.
This will imply that "an even greater proportion of migrants will flock to metropolitan areas looking for much better task potential customers, hence moistening need in the local sectors", Powell said.

According to her, distant regions adjacent to urban centers would retain their appeal for individuals who can no longer afford to reside in the city, and would likely experience a rise in appeal as a result.