What does 2025 hold for housing values in your city? The experts weigh in
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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

By Bronwyn Allen
Tue, Jul 9, 2024 11:24amGrey Clock 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.

A sluggish recovery in Melbourne could create opportunity for property investors in 2025.

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.

Perth will experience in the strongest growth in property prices, experts predict.

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.”

The slow recovery for property in Melbourne will have a knock on effect in Hobart. Shutterstock

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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The lavish Beverly Hills property hit listing sites on Thursday, months after rumours began that the couple, who are reportedly estranged , were shopping the home around only a year after buying it for nearly $61 million.

The roughly 5-acre property—which is in a gated community and spans a massive 38,000 square feet—includes an indoor sports court with an adjacent gym and games room, according to the listing with Santiago Arana of the Agency. The firm declined to comment.

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Built in 2000, the house has 12 bedrooms and a whopping 24 bathrooms. The resort-sized property has the amenities to match, including a V-shaped pool with views over the surrounding hills, a detached two-bedroom guardhouse and a 5,000-square-foot guest penthouse, according to the listing.

Listing images of the house show that Lopez and Affleck have spent the past year warming up what were fairly white-washed interiors when they purchased the home. There’s now a rich, green-painted dining room, hardwood floors and carpeted over cold, polished-stone flooring.

The couple, who got married in 2022 after reuniting some 20 years after they called off their engagement in the early 2000s, purchased the megamansion following a house hunt that went on for several months, The Wall Street Journal reported at the time.

Representatives for Lopez, 54, and Affleck, 51, did not immediately respond to requests for comment.

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