Authored by the expert who managed and guided the team behind the Australia Property Pack
Everything you need to know before buying real estate is included in our Australia Property Pack
What will happen in Australia’s real estate market? Will prices go up or down? Is Sydney still a hotspot for foreign investors? How is Australia’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with real estate agents, property developers, and clients who buy properties in Australia, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Australia’s property prices will dip slightly as interest rates increase
Rising interest rates are cooling down the Australian property market.
Back in 2022 and 2023, the Reserve Bank of Australia hiked interest rates several times, which led to a noticeable drop in property transactions and inquiries. This clearly showed that higher interest rates can slow down buyer activity. As rates climbed to 3.35% by February 2023, the goal was to curb inflation, but it also made borrowing more expensive, naturally affecting people's willingness to invest in property.
During the 2023 financial year, there was a 31% decrease in capital flow into the real estate market. Real estate agencies noticed a slowdown in property sales, even though there was more stock available. This increase in available properties led to more sales but also softened demand, contributing to slower price growth. Potential homebuyers were worried about affordability, as higher interest rates made mortgage repayments more burdensome.
In the current market, buyers are cautious, and sellers are adjusting their expectations. The increase in available properties means buyers have more choices, but they are also more selective. This shift in dynamics is causing a slight decline in property prices, as sellers compete to attract the fewer active buyers.
For those considering buying property in the country, it's essential to understand these market changes. With interest rates on the rise, it's a good time to negotiate better deals, as sellers are more willing to compromise. However, keep in mind that mortgage costs will be higher, so it's crucial to budget accordingly.
Sources: Capital.com, Properties and Pathways, Realestate.com.au
4) Property prices on the Gold Coast will rise as retirees flock to its warmer climate
The Gold Coast is becoming a top choice for retirees, especially those from Sydney, thanks to its warm climate and appealing lifestyle.
In the year leading up to September 2023, the Gold Coast saw a 176.1% increase in net migration inflows, showing its growing appeal as a retirement hotspot. This surge is largely driven by retirees seeking a more relaxed and sunny environment.
Property prices here are climbing, with the median property price hitting $1,170,000, making it the second priciest in Australia. Over the past year, house prices have jumped by 9%, outpacing the national average. Experts predict this trend will continue, with prices expected to rise by 3% to 7% in 2025 due to high demand and limited supply.
The Gold Coast's climate is a big draw for retirees who are now focusing more on lifestyle after the pandemic. New retirement communities, like The Verge at Burleigh G.C., offer luxurious living options for those wanting an active lifestyle. These communities are designed with retirees in mind, providing amenities that cater to their needs.
Infrastructure improvements, such as the expansion of the light rail network, are enhancing connectivity and accessibility, making the area even more attractive to older residents. This development ensures that retirees can easily access various parts of the city, adding to the Gold Coast's allure.
Sources: Regional Australia Institute, Ray White Surfers Paradise, Retire Australia
6) Luxury property prices in big cities will drop as demand moves to cheaper homes
In major cities, luxury property prices are expected to decline as more people look for affordable housing.
With rising interest rates, borrowing has become pricier, making luxury homes less accessible. This has led to a slowdown in home value growth, dropping from 9.7% in February 2023 to 6.0% by October 2024. As a result, more people are turning their attention to affordable housing options.
There's a noticeable uptick in the construction of affordable homes, which naturally pulls demand away from luxury properties. Governments are sweetening the deal for first-time buyers with incentives like subsidies and lower interest rates, nudging them towards more budget-friendly homes.
Demographics are shifting too. Younger buyers, often with tighter budgets, are entering the market and leaning towards affordable housing. Economic uncertainty, especially with the federal election on the horizon, is making people cautious, leading them to hold back on splurging on luxury properties.
Remote work trends are also influencing housing choices. Many are opting for homes that offer more space and affordability, often outside the city center, rather than investing in high-end urban properties.
As these factors converge, the market is seeing a clear pivot towards affordability, reshaping the landscape of property demand in major cities.
Sources: Ironfish, Minut, Realestate.com.au, Oliver Hume
7) Demand for housing in multicultural suburbs will rise due to increased immigration
In 2023 and 2024, Australia welcomed a significant number of immigrants, shaping the housing market in multicultural suburbs.
With net overseas migration figures hitting 446,000 in 2023/24, the influx of international students and skilled migrants has been a major driver of population growth. This trend is particularly noticeable in cities like Melbourne, where about half of the household growth is due to overseas migration.
Over the next 30 years, projections suggest that 80% of household growth in Melbourne will be attributed to immigration. Suburbs with high immigrant populations, such as Parramatta in Sydney, have already experienced significant housing booms, thanks to their vibrant multicultural communities.
Immigrants often choose to settle in areas where they have social connections or access to cultural amenities that cater to their ethnic backgrounds. This preference creates a self-reinforcing cycle, leading to higher demand for housing in these multicultural suburbs.
The demographic profile of immigrants, who are often young adults, further drives up housing demand. These young adults are typically in the prime of their careers, seeking opportunities and stability, which makes them eager to invest in property.
As a result, suburbs with diverse communities are seeing a surge in housing demand, making them attractive spots for property investment. The multicultural fabric of these areas not only enriches the community but also boosts the local economy through increased housing activity.
Sources: Parliamentary Business, National Housing Supply and Affordability Council, The PIE News
9) Interest in large family homes will decline as smaller, efficient spaces become more popular
In Australia, city living is on the rise as more people move to urban areas.
With cities like Melbourne and Sydney becoming increasingly crowded, population densities have soared to 38,400 and 21,000 people per square kilometer respectively. This crowding, along with rising property prices, is making large family homes less appealing. People are now opting for smaller, more affordable living spaces, which are not only practical but also help save money.
There's also a growing trend towards environmental consciousness. Many Australians are becoming more aware of their carbon footprints, and this has led to a preference for smaller, energy-efficient homes. Governments are supporting this shift by offering incentives for such housing, making it an attractive option for many.
Minimalist living is gaining popularity, thanks in part to media and social platforms that showcase this lifestyle. This trend is encouraging people to embrace simpler, more efficient living spaces, further driving the demand for smaller homes.
In urban areas, the practicality of smaller homes is undeniable. With limited space and high costs, smaller homes offer a sustainable solution for those looking to live comfortably without breaking the bank.
As the urbanization rate continues to climb, reaching 86.62% in 2023, it's clear that the preference for smaller homes is not just a passing trend but a significant shift in how Australians choose to live.
Sources: ABS, National Housing Supply and Affordability Council, Statista, Deloitte
10) Adelaide's northern suburbs will gain popularity as transport improves and housing remains affordable
Adelaide's northern suburbs are becoming a hot spot for homebuyers, thanks to improved transport links and affordable housing.
With the government's investment in projects like the Northern Expressway and the Gawler rail line, commute times to the city center have been slashed. This makes living in the northern suburbs a breeze for city workers. Imagine hopping on a train and being in the heart of Adelaide in no time. These transport upgrades are a game-changer for anyone considering a move.
Housing affordability is another big draw. Even with a 130% rise in house prices over five years, places like Elizabeth Downs are still budget-friendly. The median house price here is $435,250, which is a steal compared to the rest of Adelaide. This affordability means homes are snapped up quickly, often with multiple offers on the table the same day they hit the market.
Looking ahead, the northern suburbs are set for a population boom. Areas like Munno Para West and Angle Vale are projected to see a 142% increase in residents by 2036. Local government plans are in place to support this growth with new residential developments and infrastructure. This means more amenities and a better quality of life for those who choose to call these suburbs home.
As these areas continue to evolve, they’re becoming increasingly attractive to those seeking a balance of affordability and convenience. The combination of easy city access and lower housing costs is hard to resist. Plus, with ongoing development, the northern suburbs are poised to offer even more in terms of lifestyle and community.
Sources: Domain’s Real Estate Data, The Post’s Infrastructure Report, Home.id’s Forecast Review
14) Virtual reality will become standard for property viewings, transforming buyer interactions with the market
Virtual reality is revolutionizing property viewings in the real estate market.
In Australia, the VR market was worth USD 2.07 billion in 2023 and is expected to skyrocket to USD 6.27 billion by 2029. This surge shows how quickly VR is being embraced across different industries, especially real estate. Imagine exploring a potential new home from your couch, getting a feel for the space without stepping outside.
Real estate listings with virtual tours are getting a lot more attention. They receive 87% more views than those without, and people spend 5-10 times longer on these sites. This means buyers are not just curious; they’re deeply engaged when they can virtually walk through a property.
Surveys reveal that over 50% of adults have already taken a virtual tour. Many buyers now prefer these immersive experiences over just looking at photos. It’s like being there in person, offering a more interactive way to explore properties.
With VR, you can check out a property’s layout, size, and even the neighborhood vibe, all from your living room. This tech is not just a novelty; it’s becoming a must-have tool for anyone serious about buying property.
Sources: TechSci Research, PhotoUp
We made this infographic to show you how property prices in Australia compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
15) Demand for eco-friendly homes will grow as buyers focus more on the environment
Eco-friendly homes are gaining traction as people become more environmentally conscious.
In Australia, sustainable housing projects like RACE for 2030 are making waves by aiming to boost energy efficiency in over a million homes. This initiative highlights a clear shift towards greener living, reflecting a broader trend in the housing market. As more people prioritize sustainability, the demand for eco-friendly homes is expected to rise.
The construction industry is also seeing a surge in the use of innovative materials like composite timber, which are becoming popular due to their eco-friendly nature. This shift is driven by a growing market for sustainable building materials, as more companies offer greener options. The steady growth in this market indicates a strong preference for environmentally friendly construction practices.
Homebuyers are increasingly drawn to energy-efficient homes, with Green Star Homes offering significant energy cost savings. These savings often outweigh the initial investment, making such homes financially appealing. This financial advantage is a key factor motivating buyers to opt for eco-friendly properties, as they can enjoy long-term savings while contributing to a healthier planet.
Government incentives are also playing a pivotal role in promoting green building practices. In 2023, the Federal budget allocated funds for low-interest loans and energy efficiency improvements in housing. Additionally, many lenders are offering interest rate reductions for Green Star Homes, making sustainable choices more accessible to a wider audience.
Sources: RACE for 2030, 6Wresearch, Green Building Council of Australia
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.