HOMEOWNER UPDATE
Overall, 2025 presents a cautiously optimistic outlook for homeowners, with economic indicators and property market trends aligning to support continued growth and stability.
The economy in 2025
Forecasts indicate a modest improvement, with GDP growth expected to reach 1.6% in 2025, up from 1.1% in 2024. This uptick is anticipated to be driven by easing inflationary pressures and potential interest rate cuts, which should bolster consumer spending and investment.
Australia’s residential property market has demonstrated resilience amid economic fluctuations. While interest rate hikes in 2022 and 2023 tempered home buyer activity, recent trends indicate a revitalised market driven by easing monetary policies and persistent housing demand.
12 months of real estate in review
Over the past year, Australia’s housing market has shown notable resilience. National home values increased by 4.9% in 2024, adding approximately $38,000 to the median property value. This growth occurred despite elevated interest rates and global economic uncertainties.
Interest rates and the lending climate
The Reserve Bank of Australia (RBA) has cut the interest rate in 2025, following a series of hikes in previous years. This monetary easing is anticipated to enhance borrowing capacity, encouraging buyers and sellers to re-engage with the property market.
PROPERTY PRICE TRENDS
Nationally, at the start of 2025, property prices have experienced moderate growth. KPMG forecasts a 3.3% increase in house prices and a 4.6% rise in unit prices over 2025, with more pronounced growth anticipated in the latter half of the year as interest rate cuts take effect.
Real estate performance across Australia’s cities
The Perth property market continues to lead with significant growth, while Adelaide and Brisbane also show robust performance. Conversely, Melbourne has experienced a modest decline in home prices, attributed to higher taxes on investment properties leading to increased sales and balanced construction rates.
Real estate market dynamics
Each region, down to specific suburbs and property types (houses, townhouses, villas, or units), is influenced by unique market factors, resulting in varied performance across different areas. For detailed property marketing insights for your suburb and property type, please do not hesitate to give us a call.
CONSUMER SENTIMENT
Consumer confidence, while still below long-term averages, has been steadily improving. As of mid-November 2024, the ANZ-Roy Morgan Consumer Confidence index stood at 86.8, remaining below the long-term average of 107.6.
The Reserve Bank of Australia’s interest rate cut in early 2025 has bolstered market confidence, particularly among buyers who had been priced out during previous rate hikes. Property market fundamentals remain strong, with ongoing demand for housing, a tight rental market, and steady population growth supporting positive momentum.
The labour market is projected to remain relatively stable, with unemployment rates increasing slightly to 4.3% by the end of 2025. This marginal increase reflects a balancing act between job creation and a growing workforce.
Property market movements in 2025
Seasonal trends suggest that autumn remains a favourable period for property transactions. As we approach the cooler months, both buyers and sellers can anticipate a vibrant market with increased listings and robust buyer interest.
PROPERTY INVESTOR & HOME BUYER UPDATE
For investors, 2025 presents a balancing act – moderating rental growth, rising operating costs, and evolving tenant preferences – but also opportunity. Properties in high-demand, undersupplied areas continue to perform strongly, mainly where infrastructure and employment drive steady demand.
Rental market outlook for 2025
Australia’s rental market enters 2025 with signs of stabilisation following several years of intense pressure. After a sharp surge in rents across most capitals, rental growth began moderating in the latter half of 2024. CoreLogic data showed that while rents reached record highs, the monthly growth rate fell to its lowest point in four years by late 2024, reflecting easing demand and increased investor activity returning to the market.
What’s driving rental market changes?
The factors driving this cooling are becoming clearer. Expectations of interest rate cuts in 2025 could stimulate further investment activity, increasing rental supply and putting downward pressure on rent growth. At the same time, stretched affordability is leading some renters to seek more budget-conscious housing options, such as relocating to outer suburbs or considering shared arrangements.
Rental market fundamentals are strong
The rental market is still underpinned by strong fundamentals. Population growth, mainly through migration, remains high. Meanwhile, building approvals remain below long-term averages, and rental stock remains tight in many areas due to investors exiting long-term leasing or shifting back to short-stay markets.
Can we help you with your property needs?
We know our area and understand the market; if you’d like advice about the property market, whether you want to buy your own or an investment property, please get in touch. We’re here to help.
