2025 Australian property market outlook

As the new year unfolds, Australia's national median property price remains close to an all-time high. 

While annual price growth was monumental in some markets over 2024, there has been an easing across the board as high interest rates and poor affordability put pressure on buyers. 

But with a rate cut finally arriving in February and the potential for more to come throughout the year, will there be another resurgence or are we looking at a more stable year ahead? Find out what the experts are saying.

The rate-cutting cycle has begun

After a rapid run of interest rate hikes from May 2022 to November 2023, we saw the RBA hold the cash rate at an uncomfortably high 4.35 per cent for more than a year — until February 18th, 2025. 

The sustained pressure of all those months on hold, along with growing housing affordability issues around the country, caused price growth in markets all across the country to slow and, in some cases, reverse. 

But, with the first rate cut since 2020 finally arriving this month, we may be looking at another positive shift to Australia's housing markets. 

CoreLogic's research director Tim Lawless said "The most important thing about the rate cut is the lift in sentiment.

"We know historically that consumer confidence and housing market activity are generally closely correlated, so we should see more buyers becoming more active."

Mr Lawless warned that just one cut isn't going to dramatically shift the path of Australian real estate, though.

"We aren’t expecting the early phase of rate cuts to be the catalyst for a new phase of material growth in housing values due to factors like stretched housing affordability," he said.

So could further rate cuts shake up our housing markets once again in the coming year? 

Interest rates are predicted to continue falling in 2025

After cut number one, all eyes will be on the RBA in the coming months to see how far interest rates could drop.

As of February, the cash rate sits at 4.10 per cent, down from the high point of 4.35 per cent. The big four banks have mixed forecasts as to what comes next:

• CBA and Westpac predict the cash rate dropping to 3.35% by December 2025
• NAB predicts the cash rate dropping to 3.10% by February 2026
• ANZ predicts the cash rate dropping to 3.85% by August 2025

There are many moving parts that could determine which way the RBA goes from here, but if rates were to come down a full percentage point over the course of 2025, property prices could continue to move north. 

Some CoreLogic analysis showed that, "based on previous periods of rate reductions, national dwelling values would increase an average of 6.1 per cent for each 1 percentage point decline in the cash rate."

CoreLogic's Eliza Owen was careful to note that Australia is not just one housing market, though, and the effects would be varied. Sydney and Melbourne in particular could be well-placed to see a resurgence if rates continue to fall. 

Finder's head of consumer research Graham Cooke also sees the potential for a rebound in price growth if four rate cuts were on the cards. 

He told REA that, "While rate cuts might alleviate some financial pressure on current homeowners, they could also reignite demand in the housing market, potentially driving up property prices again."

Price growth may continue easing in 2025

Although rate cuts could serve to stimulate Australia's property markets once again, the widespread expectation seems to be that price growth in 2025 will be slower than it has been in 2024. 

Looking at Australia as a whole, here are the big banks' predictions for the year ahead: 

• Westpac forecasts national annual growth of +3.0 per cent.
• NAB forecasts national annual growth of +4.2 per cent.
• ANZ forecasts national annual growth of +5.5 per cent.

Zooming in to NAB's city-by-city predictions, the bank predicts less extremes in diversity across all of the capital cities in 2025, with NAB Chief Group Economist Alan Oster foreseeing "a softer but still positive rate of growth following the strong growth in prices over recent years."

NAB sees Perth, Adelaide and Brisbane continuing to deliver the strongest growth amongst the capitals, with Sydney, Melbourne and Hobart showing signs of moderate recovery. 

Mr Oster concluded that, "Though price growth has slowed somewhat, underlying demand for property remains strong with the population expected to remain elevated in the near-term."

What else is predicted for Australian property in 2025? 

Each year, SQM Research Managing Director Louis Christopher releases his Boom and Bust report which includes some more nuanced projections for the year ahead. 

In late 2024, Mr Christopher again presented four distinct paths Australian property could go down depending on a range of factors. With rates being cut in February, he's narrowed that down to one particular scenario. 

Mr Christopher said "I now expect an about-face turnaround in the fortunes of the Sydney and Melbourne housing markets.

"If I am right, we should see a lift over the next four weeks in auction clearance rates for these two cities. On our measure of clearance rates, we could see a rise in both cities to the 50 to 60 per cent range."

While he has Melbourne and Sydney pegged for modest gains in 2025, the outlook for Perth, Brisbane and Adelaide is significantly rosier. He expects the three cities to see double-digit gains across the year. 

Despite expecting mixed performances across our capital cities, it's telling that Mr Christpher is forecasting positive growth for every market. 

More affordable properties could continue to see increased competition from buyers. "We still have a rental crisis on our hands; so, any would-be first home buyer will jump at this opportunity to get out of the rental market if they have the budget to do so," he said. 

Of course, forecasts should always be taken with a grain of salt, as any number of conditions can change on a dime. 

It's critical for sellers to research their own local markets to find out what's in store for a particular suburb as the big-picture forecasts may not apply across the board.

Thinking of selling?

If you're looking to get in on the action in 2025, it's important to be as prepared as possible in order to cut through the competition and achieve a standout result. 

Step 1: Understanding how your market is performing

Every market is different, and understanding your local market is fundamental to making the right selling decisions. Our guide to tracking market trends and data will help you to get a clear picture of how your market is performing and how that impacts you as a seller. 

Step 2: Know what your property might be worth

Getting a free home value estimate is a great way to set a foundation for your selling expectations and begin planning the path forward.

Step 3: Get a no-obligation market appraisal from a top real estate agent

Understand what your property could sell for in the current market by speaking to the top-performing agents in your suburb. Comparing top agents in your area will help you find the perfect partner for your selling journey and move towards a successful result.

Step 4: Finally, get your property listing-ready

Taking a thorough approach to preparing your home for sale is another critical step. From cleaning, decluttering, painting and performing other cosmetic renovations to home staging, photography and marketing, getting your property to sale-ready condition is a must.