Key takeaways
Brisbane and Adelaide are expected to join Sydney, Melbourne, and Canberra with median house prices above $1 million by the end of 2025, with Perth not far behind.
Interest in regional property has continued to decline in Sydney and Melbourne compared to last year, while Adelaide and Perth have experienced an increase.
Despite affordability pressures, buyers still prioritise home luxuries like “Pool”, which remains the top keyword search nationally, “Waterfront” placed second, up from fourth in 2023.
“Study” drops to seventh place this year from second in 2023, suggesting a shift in work-from-home trends as more workers return to the office.
“Granny flat” remains highly sought-after at fourth place, driven by tight rental markets, demand for side income, extra workspaces, or multigenerational living.
As we close the chapter on 2024, it’s clear that Australia’s property market has showcased remarkable resilience amid economic uncertainty.
Despite ongoing challenges like rising living costs, affordability pressures, and stubbornly high interest rates, the property markets have defied expectations.
Domain’s 2024 End-of-Year Wrap and 2025 Outlook provides an in-depth look at the forces shaping the market and offers a roadmap for what’s ahead.
Dr Nicola Powell, Domain’s Chief of Research and Economics, summed it up perfectly:
"In 2024, Australia's property market demonstrated remarkable resilience amid economic uncertainty.
Despite ongoing cost-of-living pressures and a persistently high cash rate, the market showed an impressive ability to adapt.
Undersupply continues to push prices up, underscoring the market's remarkable endurance."
2024: Defying Economic Headwinds
This year, Australia’s property market proved its adaptability and resilience, even in the face of inflation and affordability challenges.
According to Domain, a combination of chronic housing undersupply and strong population growth has kept demand robust, despite the economic challenges.
Changing buyer preferences
Domain’s report highlights interesting trends in buyer behaviour.
Searches for properties featuring "pool" and "waterfront" topped the list nationally, reflecting Australians’ desire for lifestyle amenities.
Meanwhile, the demand for “study” spaces dropped significantly, reflecting a shift as more Australians returned to the office.
Regional winners and losers
Regional markets continued to evolve, with Sydney and Melbourne seeing reduced interest in tree and sea change properties.
However, smaller cities like Adelaide and Perth experienced a surge in enquiries, demonstrating their growing appeal.
2025: What’s on the Horizon?
Domain forecasts suggest that median house prices in Brisbane and Adelaide will surpass $1 million by the end of 2025, joining Sydney, Melbourne, and Canberra in this elite bracket.
However, affordability challenges may temper the pace of growth as more buyers weigh their options.
Key drivers and predictions for 2025
1. Interest rate cuts: a potential catalyst
With affordability stretched to its limits, Domain anticipates that even modest cash rate cuts could reinvigorate buyer demand.
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Dr. Powell notes that the timing of these cuts will shape the market, potentially creating “a year of two halves, with a weaker first half and a stronger second.”
2. Federal election and housing policies
As housing affordability becomes a political hot topic, 2025 could see bold reforms aimed at addressing supply and affordability issues.
Domain suggests policies such as first-home buyer incentives, reforms to negative gearing, and land tax replacements could significantly influence market dynamics.
3. Rising demand for density
Australia’s cities remain among the least dense globally, but increasing population pressures will likely drive a surge in medium-density housing.
Townhouses and smaller apartment buildings are expected to gain popularity, particularly in middle-ring suburbs, as planners address affordability concerns.
4. Sustainability is here to stay
Domain’s research highlights that buyers increasingly prioritize energy-efficient features like solar panels, battery storage, and water-saving systems.
Sustainable homes are not just cost-efficient but also attract a price premium, making them a smart investment for the future.
House price forecasts for 2025
According to Domain’s projections, price growth will continue in 2025, albeit at a slower pace due to affordability constraints and increasing buyer options.
House and unit price forecasts for 2025
| House and unit price forecasts to the end of 2025 | ||
| Location | House | Unit |
| Australia | 4% to 6% | 3% to 5% |
| Sydney | 4% to 6% | 4% to 6% |
| Melbourne | 3% to 5% | -2% to 0% |
| Brisbane | 5% to 7% | 7% to 9% |
| Perth | 8% to 10% | 8% to 10% |
| Adelaide | 7% to 9% | 7% to 9% |
| Canberra | 3% to 5% | -4% to -2% |
| Combined Capitals | 5% to 7% | 3% to 5% |
| Regional NSW | 2% to 4% | 1% to 3% |
| Regional VIC | -5% to -3% | -2% to 0% |
| Regional QLD | 6% to 8% | 5% to 7% |
| Combined Regionals | 2% to 4% | 2% to 4% |
As Dr. Powell aptly summarized:
"In 2025, we expect prices to keep rising, though at a slower pace than in 2024, due to affordability pressures and more buyer options."
The Australian property market remains robust, and its ability to adapt to shifting conditions is unparalleled.
For seasoned investors and first-time buyers alike, 2025 presents both challenges and opportunities.
Whether it’s the expected interest rate cuts, government policy changes, or evolving buyer preferences, staying informed and adaptable will be the key to success in the coming year.
