Australian real estate trends forecast for 2025

An interest-rate cut isn’t the only big change real estate experts are expecting to hit the country next year as affordability and lifestyle decisions continue to play out.

Attached dwellings are becoming more valuable due to affordability. Picture: iStock/BeyondImages

Bah humbug if you have been wishing for a rate cut this Christmas. Property experts are putting their money on the second half of next year as the most likely time the cash rate will start to come down. But what does this mean for the property market in 2025 and will we continue to see more listings? We spoke with some of the country’s top real estate experts for their thoughts on the year ahead.

INTEREST RATES

There’s still a few unknowns when it comes to predicting when the RBA will start to lower interest rates, says Ray White chief economist Nerida Conisbee.

Will prices start to pick up in Melbourne again next year? Picture: NewsWire/ David Crosling

While inflation is roughly where the RBA wants it to be, there is no certainty that it will stay there following the results of the recent US presidential election, she says.

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If President-elect Donald Trump imposes high taxes on Chinese goods when he enters the Oval Office in the new year it could push up prices globally, fuelling inflation in Australia.

On the other side of the coin, if the Australian economy starts to struggle and unemployment rises the Reserve Bank may need to cut rates sooner than anticipated, she says.

And could our next interest rate cut depend on this man? Picture: Aaron Chown – Pool/Getty Images

Founder of McGrath Estate Agents, John McGrath says the first reduction is not likely to occur until the second half of the year.

“Sadly I don’t think we’re going to see any relief for mortgage holders for the next six months,” McGrath says. “There’s a number of things that Trump has suggested that could be inflationary in terms of his policies. I think everyone is just waiting to see what happens in general.”

He says when combined with cost of living pressures, high rates are causing challenges for mortgage holders, first home buyers and investors – particularly those in the sub-$1.5m demographic, resulting in a “tale of two markets” between those with and without high debt burdens.

John McGrath, founder of McGrath Estate Agents.

“We’re aware of it because a reasonable percentage of our listings are people that either have to sell, or if they don’t sell now, they’re going to have to sell over the next six months,” he says.

“It (the cash rate) is going to need to come down one per cent or two before it gives real relief. But when the trajectory is downward, and people feel there’s a bit of pressure coming off each month, that will be very helpful.”

BUYER DEMAND

Hotspotting director and real estate researcher Terry Ryder says he expects buyer demand to continue to be strong and localised in 2025.

Ray White chief economist Nerida Conisbee.

“It’s very much dependent on local economies and those areas of the country where the parameters and the metrics are strong,” he says. “We’re going to see strong buyer demand, like we’ve seen this year, in Adelaide, Brisbane and some regional markets but not in others.”

Demand will continue to grow for attached dwellings, such as apartments and townhouses as well as regional centres and smaller cities for affordability and lifestyle benefits, he says.

PROPERTY LISTINGS

Listings have been climbing in recent months and are likely to continue into next year, Ryder says.

“The imbalance between supply and demand is correcting a little bit,” he says. “There’s no shortage of listings in the bigger cities. Darwin is the only capital city where listings have dropped recently.

Listings have been on the rise this year. Picture: Jenny Evans/Getty Images

“Based on the figures from SQM Research, the listings are rising quite strongly in Perth, Adelaide and Brisbane.”

He says despite the recent growth, the listings in these three cities are below “what used to be considered normal but are starting to head in the right direction.”

McGrath says he expects to see a “normalisation” of listings after the first quarter of next year to similar “healthy” levels seen during 2024.

“I think we’ll continue to see some listings coming on from people under duress in the first quarter,” he says. “Beyond that, I think we’ll find those that have had to sell, been forced to sell, will be on the market and sold.”

Ballarat could be a good market to watch in 2025.

MARKETS TO WATCH IN 2025

Hotspotting director Terry Ryder says there is evidence that the Perth property boom “has passed its peak”, explaining the rate of price growth has been slowing as sales volumes reduce and listings increase. He says the following markets may have good price growth potential in 2025.

Darwin – After being a poor performer for two years, Darwin is seeing more activity in its economy, has housing that is considered affordable by many people and has the highest rental yield out of all of the capitals.

Perth may have already peaked.

Melbourne – Prices have lagged in the nation’s biggest capital by population, becoming comparatively cheaper than those in Sydney and even parts of Brisbane, Adelaide and Perth, creating quite an attractive value proposition.

Ballarat – Just like in Melbourne, state government taxes and policies led to investors selling up and avoiding buying in the state, which put a dampener on demand and price growth, but historically Ballarat has seen strong price growth and could pick up again now that prices have dropped and represent good value.

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Originally published as Australian real estate trends forecast for 2025