According to domain prediction, Perth is predicted to lead in house prices growth again, followed by Adelaide and Brisbane. Moreover, rising interest rates could worsen house affordability. Meanwhile, demand for houses will continue to push prices up across the country.
Online property marketplace Domain released its forecasts on Thursday. According to the forecast, Sydney and Melbourne are expected to have lower price growth as buyers move to smaller cities. Nicola Powell, Domain Chief of Research and Economics, says that there will be stronger growth coming out of those bigger capitals. However, the 2024 data shows that Perth, Adelaide, and Brisbane have been the stand-out performers. This trend will continue in 2025.
The demand in supply and tighter rental markets are adding to faster growth in smaller cities. In Brisbane, the prices are predicted to rise between five to seven per cent. Whereas, in Adelaide, seven to nine per cent and in Perth it will be eight to ten per cent. Overall, the national growth is expected to be between four to six per cent.
Reserve Bank of Australia Interest Rates
Despite the Reserve Bank of Australia maintaining higher-than-expected interest rates. Despite the unaffordability of many buyers, the market demonstrated “notable resilience.” Dr Powell believes that the resilience was particularly evident throughout the year. Heh said, “We find ourselves between elevated interest rates and a housing shortage … and that shortage isn’t likely to be resolved by 2025.”
Dr. Powell predicts that 2025 will unfold in two distinct phases. Softer spring sales are expected to persist into autumn, followed by a mid-year interest rate reduction that could stimulate demand and drive stronger price growth in the latter half of the year.
Meanwhile, Ray White chief economist Nerida Conisbe believes that property prices in most Perth suburbs are likely to continue rising next year. She believes there are several factors adding to the rise of property. A sharp slowdown in the eastern states seems to be affecting sentiment, especially among interstate investors who have been very active.
“We’re also observing a deceleration in iron ore price growth, and lithium prices have declined. Mining plays a major role in shaping Perth’s property market.”
She further noted, “Another key factor is the significant global uncertainty, particularly around the US election. Trump’s tariff-heavy agenda could trigger a notable slowdown in China’s economy, which would have ripple effects on WA’s economy and its property market.”
