A recent forecast report for Australia’s 2025 housing market has been released, drawing significant attention. The report suggests that with interest rate cuts, housing prices could increase by up to 6%. The overall market is expected to see a significant upward trend in prices, with a projected increase of 4% to 6% in 2025.
Price Outlook by City:
①Sydney: Housing prices and apartments are expected to rise by 4% to 6%. This increase will benefit from the predicted interest rate cuts by ANZ, which will enhance borrowing capacity and drive price growth.
②Melbourne: Housing prices are expected to rise moderately by 3% to 5%, while apartment prices may remain flat or decrease by 2%. Compared to Sydney, Melbourne offered better value over the past year, but recently, a downward trend has been observed.
③Perth: Perth is expected to lead the price growth, with an increase of 8% to 10%. Adelaide’s housing prices and apartments are forecasted to rise by 7% to 9%, while Brisbane’s housing prices are projected to rise by 5% to 7%, with apartments rising by 7% to 9%. These cities benefit from population growth, which boosts housing demand and injects strong momentum into the real estate market.
Nicola Powell, Head of Research and Economics at Domain, stated that the first half of 2025 will see a weak market, followed by a recovery in the second half. Price growth will slow down, and this trend is expected to persist over the coming year. Specifically, the market will be sluggish in the first half due to cautious buyers,
but in the second half, the reduction in inflation, along with interest rate cuts and improved economic confidence, will encourage buyers to return to the market. Powell also noted that Perth, Brisbane, and Adelaide have affordable housing prices and strong growth momentum. The federal government’s “First Home Buyers Assistance Program” will encourage first-time buyers, and Sydney and Melbourne’s lower-priced segments will also see price increases.
Domain’s forecast aligns closely with predictions from Australia’s four major banks: NAB expects a 4.2% increase, Westpac predicts a 3% rise, Commonwealth Bank forecasts a 5% increase, and ANZ expects a 5% to 6% increase nationwide.
Adelaide Timbrell, an economist at ANZ, pointed out that population growth in Australia’s medium-sized cities is driving housing price increases, with demand far outpacing new housing construction, as seen in Brisbane, Adelaide, and Perth. Sydney will benefit from interest rate cuts, income tax reductions, and wage growth outpacing inflation, all of which will boost purchasing power and contribute to price increases. Timbrell also mentioned that disposable income will rise in 2025, helping with borrowing and saving, benefiting from relaxed lending conditions and tax cuts.
Australia’s housing market is expected to see overall price growth in 2025, though the rate of increase will vary by city. Caution is advised in Sydney and Melbourne, while Perth, Adelaide, and Brisbane will experience stronger growth, making them more attractive for investment. Buyers should pay attention to market trends such as interest rate cuts and inflation relief to seize the right opportunities. Investors need to analyze price trends in different cities to optimize asset allocation. Real estate professionals should stay updated on market changes to provide clients with accurate purchasing advice to navigate market challenges.
