What does 2025 hold for housing values in your city? The experts weigh in
Factors such as migration levels, rental demand and persistently high interest rates are impacting on some major centres more than others
5 min
Australian house prices are forecast to continue rising in 2025 — but at a slower pace. Supply of homes for sale will remain constrained and potentially higher interest rates hanging around for longer will continue to limit both finance availability and affordability.
Moderating population growth as migration rates normalise is expected to soften demand. However, this will be offset somewhat by rising rents continuing to encourage some people to buy.
In KPMG’s Residential Property Outlook, chief economist Dr Brendan Rynne says: “When the cost of renting is comparable to the cost of buying and owning a similar property, households may opt for home ownership, potentially driving up house prices.”
The research team at Domain notes that more people living alone will continue to put pressure on home values and rents in FY25. COVID and the opportunity to work from home prompted many people to leave shared inner city rental accommodation and set up their own homes in more affordable areas. Meantime, as our population gets older, more people are forced to live alone due to marriage breakdown or the death of a spouse.
Some markets will see superior apartment price gains compared to houses. CBA senior economist Belinda Allen says affordability challenges have “seen drivers of home price growth switch slowly”, as more buyers accept they cannot afford a house. This trend is most notable in mid-tier capital cities like Perth, Brisbane and Adelaide where prices have risen most.
Ms Allen adds: “We are seeing a similar thematic in the rental market; national unit rents are up 22 percent over the past year compared to 16 percent for house rents.”
Here is a snapshot of predictions for property price growth in the period ahead.
Sydney
Domain forecasts 6 to 8 percent growth for house prices, taking the median above $1.7 million by the end of FY25. Domain also tips 4 to 6 percent growth for apartments, which would make Sydney one of the best-performing unit markets of FY25.
In the calendar year of 2025, KPMG’s predictions are 5.3 percent house price growth and 5.6 percent for units. CBA’s predictions are 4 percent growth for Sydney home values overall.
Melbourne
Domain forecasts 0 to 2 percent growth for house prices in what is now “the slowest and most inconsistent recovery in the city’s history”. Domain tips better growth for apartments at 2 to 4 percent. Houses will underperform because of high supply compared to demand, and the introduction of significantly higher land taxes for investors. By the end of FY25, the city will still not have regained its median price losses from the 2022-23 downturn.
In the calendar year of 2025, KPMG’s predictions are 6.5 percent growth for both houses and apartments in Melbourne. CBA’s predictions are 4 percent growth for dwelling values overall. CBA’s Ms Allen says that once investors get used to the taxation changes, they may look to Melbourne for value and greater capital growth potential outside the recent top-performing mid-tier cities.
Brisbane
Domain predicts 6 to 8 percent house price growth in FY25, which may see Brisbane crack the million-dollar median for the first time. Unit prices are tipped to grow by 4 to 6 percent, which would make Brisbane one of the top-performing unit markets of FY25.
In the calendar year of 2025, KPMG’s forecasts are 5.1 percent house price growth and 2.5 percent for units. CBA’s predictions are 7 percent growth for dwelling values overall.
Adelaide
Domain sees 7 to 9 percent growth for house prices in Adelaide, with the city likely to reach a million-dollar median by December 2025. The unit market is forecast to be one of the best in the country with 4 to 6 percent growth in FY25.
In the calendar year of 2025, KPMG’s predictions are 5.9 percent house price growth and 4.6 percent for units. CBA’s predictions are 9 percent growth for dwelling values overall.
Perth
Perth will dominate the capital cities with house price growth of 8 to 10 percent in FY25, according to Domain. Unit prices are forecast to lift by 4 to 5 percent, but even at the top growth rate, the median will still be under a very comparatively affordable $450,000.
In the calendar year of 2025, KPMG’s forecasts are 5.2 percent house price growth and 8 percent for units. CBA’s predictions are 12 percent growth for home values overall.
Canberra
Canberra is only just moving into its recovery now, with house prices likely to see mild growth of 0 to 4 percent in FY25, according to Domain. Unit prices are tipped to increase by 1 to 4 percent. Over the past few years, the ACT Government has encouraged more strata-title development as new land supply runs out amid ongoing population growth, and as residents get older and need more downsizing housing options.
KPMG’s predictions are 6 percent house price growth and 4.1 percent for units in Canberra in the calendar year 2025.
Hobart
KPMG’s forecasts are 5.7 percent house price growth and 5.3 percent for units in Hobart in the calendar year 2025. KPMG said weak economic conditions in Melbourne will directly affect Hobart, with flow-on impacts to property values.
KPMG’s Dr Brendan Rynne said: “Given the interconnected nature of these two markets, the sluggish performance in Melbourne is likely to have a ripple effect on Hobart’s economic prospects.”
Regional Australia
Domain Research says the removal of incentives for migrants to settle in regional areas will impact population growth and housing demand in FY25. Offsetting this will be the construction sector focusing more on city projects amid a severe undersupply nationwide, thereby keeping supply of new homes in regional areas tight. Towns with close proximity to the cities will remain attractive for buyers priced out of metro markets.
Domain forecasts moderate growth for regional Queensland with 2 to 4 percent house price gains and 3 to 4 percent unit price gains. The Gold Coast and Sunshine Coasts should crack new record house prices in FY25, with Domain tipping 3 to 6 percent growth for houses and 3 to 4 percent growth for units on the Gold Coast and 2 to 5 percent growth for houses and 3 to 4 percent growth for apartments on the Sunshine Coast.
Growth will be sluggish in regional NSW with 0 to 3 percent gains for houses and 1 to 3 percent gains for units. Houses prices in regional Victoria may decline in FY25, with forecasts of between a 3 percent fall and 0 percent growth. Domain tips unit prices to lift 1 to 2 percent.
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3 min
Australia’s housing crisis will not be solved by first-home buyer incentives or tax changes alone, with leading property figures warning governments must tackle supply constraints if affordability is to improve.
Speaking at the Kanebridge Quarterly Property Leadership Summit in Sydney last week, expert project marketing specialist Sam Elbanna, property investor and fund manager Paul Miron and property consultant Karla McNeice said that a lack of housing supply remained the central issue facing the market.
Elbanna, Director of CPM Realty with more than 30 years’ experience in project sales, argued that successive governments had focused too heavily on stimulating demand rather than addressing the barriers preventing new housing from being delivered.
“The misconception is that politicians think the way to solve the housing crisis is to drive demand,” he said.
“The reality is that’s not the way. This is a supply-side problem, and it needs to be solved on the supply side.”
Drawing on his experience in project sales, Elbanna said policies designed to help first-home buyers often had unintended consequences, pointing to previous grants that ultimately flowed through to higher property prices.
Instead, he said developers were facing increasing red tape, approval delays and rising costs, which were discouraging new housing supply.
“In the absence of stock, demand exceeds supply,” he said.
Miron, a Co-Founder and Fund Manager of Msquared Capital, said the housing debate had become overly focused on tax policy while overlooking broader structural issues.
He argued that affordability challenges stemmed from a combination of factors, including planning constraints, supply shortages, migration levels and interest rates.
“No-one can be 100 per cent certain on the real reason for property prices is going up,” he said.
“The reason why property prices are higher is a combination of interest rates, lack of supply, migration, vacancy rates and maybe taxes play a role.”
Miron was critical of recent federal housing policy changes, warning they could reduce the number of new homes being built and further constrain supply that was even highlighted in the budget.
He also highlighted the importance of the property sector to the broader economy, noting that residential real estate and related industries employed more than one million Australians.
McNeice, who advises developers on sales strategy and market intelligence, said understanding buyers had become increasingly important as affordability pressures intensified.
While affordability remained a major consideration, she said today’s buyers were focused on value rather than simply price.
“People are looking for value for money,” she said.
She said buyers were increasingly evaluating factors such as transport connections, walkability, nearby amenities and flexible living spaces that could accommodate changing family needs.
“What infrastructure is going on? Can I walk to the shops? Can I meet people at the local cafe?” she said.
The panel also discussed the mounting pressures facing developers, with Elbanna arguing that many projects become financially unviable from the moment a site is purchased.
“The viability of a development happens at the moment the site is bought,” he said.
He said rising construction costs, higher interest rates and overly optimistic feasibility assumptions had left some developers exposed as market conditions changed.
While acknowledging the growing number of smaller and first-time developers entering the market, Elbanna said property development required expertise across finance, construction, marketing and legal disciplines.
“It is actually a business that requires a level of expertise,” he said.
Looking ahead, the panel agreed opportunities remained in the market despite current challenges.
Miron said property should continue to be viewed as a long-term investment and cautioned against trying to time short-term market movements.
McNeice said success would increasingly depend on identifying projects that genuinely met changing buyer expectations.
Elbanna said affordable housing remained achievable, but developers needed to deliver more than just homes.
“We can provide affordable housing in this country,” he said.
“But we’ve got to wrap that affordable housing with the things that people want.”
As Australia’s housing affordability debate intensifies, the panellists agreed on one point: without a meaningful increase in housing supply, demand-side measures alone are unlikely to solve the nation’s property challenges.
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