Australian Housing Market Set for Significant Growth, According to Experts
Australia’s major cities are poised to experience record-breaking property price surges in the coming year, driven by a persistent imbalance between supply and demand. This insight is drawn from the recently released Domain FY25 Price Forecast Report, which anticipates an overall growth of 4 to 7 percent in the median house prices across the capital cities, potentially reaching new highs between $1.16 million and $1.19 million.
Sydney is expected to lead this surge, with its median house price forecasted to escalate to between $1.73 million and $1.76 million by the end of the next financial year, marking an increase of 6 to 8 percent. “We predict that population growth, construction challenges, and borrowing power will be the key drivers behind the price growth,” explained Dr. Nicola Powell, Domain’s head of research and economics, in an interview with Jemimah Clegg. Powell also highlighted the long-standing issue of housing undersupply that has exacerbated price pressures: “It’s been the chronic structural undersupply that’s been built over many, many years. We just haven’t met the needs of the growing population.”
Conversely, Melbourne and Canberra are forecasted to experience the slowest growth rates. Melbourne’s median house price is projected to remain around $1.03 million, with a slight potential increase to $1.05 million. Dr. Shane Oliver, AMP Capital’s chief economist, noted that tax changes in Melbourne have led to an increased number of property listings, which might stabilize prices in the city. “There’s been a notable rise in listings in Melbourne compared to other cities, that’s going to be a drag for some time to come through the next financial year,” Oliver told Clegg.
Despite the sluggish growth in some areas, other cities like Perth and Adelaide are expected to see significant price increases. The report predicts that Perth’s median house price will jump by 8 to 10 percent, reaching between $840,000 and $856,000 by mid-2025. Adelaide’s median is forecasted to increase by 7 to 9 percent, potentially surpassing the $1 million mark.
HSBC’s chief economist, Paul Bloxham, also weighed in, noting the relative catch-up of smaller capitals in the housing market. “If you rank up the cities, and you look at their relative prices, which ones look like they’ve moved out of line? The smaller capitals like Perth, for example, had fallen a long way behind,” Bloxham commented.
The dynamics of the Australian housing market continue to be influenced by demographic shifts, affordability issues, and the aftermath of the pandemic, shaping a complex landscape for potential homeowners and investors alike.
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