27 Jan 2025

A 2025 Property Market Outlook

From the desk of Melinda Jennison, Managing Director – Streamline Property Buyers and REBAA President


As part of our media engagement strategy toward the end of last year, I was asked to put forward some thoughts on how Australia’s property markets might perform in 2025. I studied the available data and drew on insights I’d gleaned from discussions with other buyers’ agents and affiliate professionals to offer some broad perspectives.

This article outlines some of my perspectives but, as we all know, local nuances can impact the direction of sub-markets in any location, and those members who specialise in certain service areas will have a more intimate knowledge of their patch.

I would love to hear what others think will happen in 2025 – a great discussion is already underway on the REBAA forum at this link. If you’d like to add your comments, please join in.

I’d also encourage everyone to take a look at our REBAA State Representatives’ opinions at this link to our website. Their reflections on statewide markets in 2024 and how activity will carry forward into this year are compelling.

For mine, I believe that Australian property markets will be more broadly diverse in price performance and sales volume in 2025 compared to what we saw over the past four years. These performance variations will be defined by locations, property types and price points.

At the beginning of last year, markets were splintering after some uniform shifts throughout the pandemic and ever since. It feels like this divergence is now well established and gaining momentum.

Looking at the major capitals and the data indicates Brisbane, Perth and Adelaide are likely to again lead the way, provided that the demand for housing in these large centres continues throughout the year and listing volumes remain low, as they have been for several years now, although there are early signs that total listings in Perth are trending higher. There is little chance that housing supply will ramp up dramatically in these cities this year – stymied by continued high construction costs and long build times.

In contrast, Sydney and Melbourne are likely to see slower growth this year.   Affordability continues to be a concern for many Sydney buyers and there is also more broadly good stock levels on hand across both of these capital cities –and this will influence competition between buyers and price performance.

Regional markets will also operate at differing speeds with fundamentals continuing to play their part. Those centres with great lifestyle options and diverse economic bases should remain solid. Others with less fundamental foundations may see prices soften, particularly as COVID buyers continue to shift their focus and households back toward larger centres.

In terms of what drivers to watch in 2025, I believe interest rate movements will be pivotal. The slowdown in inflation has been sticky, although the latest numbers suggest downward momentum in CPI growth is entrenched. The chances of a rate cut earlier in 2025 have improved in recent weeks. There’s little doubt increased borrowing capacity via rate cuts will enliven buyer sentiment.

The positive price influence from rate cuts is enhanced when you factor in housing supply constraints – especially new housing construction. Developers’ margins are tight, and in many cases, projects remain infeasible to proceed. We simply must see construction costs and build times come down before there is a meaningful increase in supply, and that doesn’t appear to be on the horizon just yet.

In addition, population growth endures with high migration playing a key role.

It’s a recipe for ongoing price gains and tight rental markets in 2025 across many population centres.

One of the segments most worth monitoring this year will be affordable housing. Affordability will be an important focal point in 2025 – a sector traditionally dominated by first homebuyers and investors.

I expect housing projects in capital city growth corridors to be very active in this segment. This is particularly so for those in regional areas and the outer suburbs with strong infrastructure development and lifestyle appeal. This is where affordability-driven buyers will feel they get the most bang for their limited buck.

Smaller housing options in prime locations, such as townhouses and units, are likely to remain in high demand too. Buyers who want all the appealing benefits of near-city and blue-ribbon suburbs but without the major price tag will make compromises and look for more affordable housing options.

Some of the other drivers to keep an eye on this year will be in the political realm. There’s a federal election due soon and while the outcome of elections rarely has a material impact on prices over the medium to long term, there is the short-term slowdown that must be allowed for around the polling date. Also, there has been plenty of tenancy legislation and taxation changes at state government levels over the past few years. It will be interesting to see how these play out in 2025, and whether there’s a shift in sentiment among the electorate towards more property-owner-sympathetic policies. We can only hope good sense prevails in that space.