After two years of rapid price growth, the Australian property market is set to cool slightly in 2025. Prices are expected to continue rising, but the pace of growth is forecast to slow as the market readjusts.

Predictions for 2025

NAB’s latest Residential Property Survey predicts the following annual value increases across Australia’s capital cities in 2025:

• Perth up 8.3

• Adelaide up 7.9%

• Brisbane up 5.0%

• Sydney up 3.7%

• Melbourne up 3.3%

• Hobart up 2.4%

For Perth, Adelaide, Brisbane, and Sydney, this represents a slower rate of growth compared to their current trajectory. Key factors such as affordability challenges, increased housing supply, and shifts in economic conditions are expected to play a role in this deceleration.

In contrast, Melbourne and Hobart are predicted to rebound after experiencing price declines in 2024. Strong population growth and ongoing infrastructure investments are likely to drive these markets forward, potentially attracting local and interstate investors.

The supply outlook

Across the capitals, supply is expected to improve, with new home building already trending upward in all capitals except Sydney, according to the Housing Industry Association. 

The Australian Bureau of Statistics also reports a rise in dwelling approvals, signalling relief from the bottlenecks that previously slowed development. This increase in supply could ease some of the pressure on housing affordability over the coming year.

Potential interest rate cut

There’s promising news for buyers: the Reserve Bank of Australia (RBA) is widely expected to cut the official cash rate in 2025. 

Opinions vary on the timing. Economists at Commonwealth Bank, and ANZ anticipate a cut as early as February, while Westpac and NAB believe it could be delayed until May due to the robust labour market.

Borrowing capacity

A potential rate cut could significantly impact your borrowing power. Lower interest rates would reduce mortgage repayments and boost borrowing capacity, making it easier to compete in the property market.

If you’ve been previously priced out of the market, a rate cut could also present new opportunities – especially in areas where price growth is expected to remain moderate. 

Finally, with increased borrowing capacity and lower interest rates, the market is likely to see more buyer activity. 

Why now could be a good time to buy

If you’re financially ready, buying sooner rather than later could work in your favour.

Property prices are still forecast to rise in 2025, albeit at a slower rate. Waiting could mean higher entry costs as prices continue to climb. Additionally, a rate cut may spur increased buyer demand, pushing up prices in competitive markets.

Acting now could allow you to get ahead of the competition and lock in a property before upward pressure intensifies.

Looking to secure finance to buy property? As an award-winning mortgage broker in Sydney with over 390 five-star Google reviews, Eventus Financial can help. Schedule a no-obligation consultation with Alex to get started.