2025 Australian Real Estate Outlook | Top Locations to Consider

The year 2025 has arrived, and for many, investing in real estate is high on the agenda.

In this guide, I’ll share insights on:

• The anticipated direction of the property market in 2025
• Key economic forecasts shaping market trends
• Markets poised for growth
• Areas that may experience declines, helping you position yourself for the best property performance.

Curious about what’s ahead? Let’s dive in.

Real Estate Forecast for 2025

Where are property prices headed this year?

Australia’s real estate market is undergoing significant changes, with new research revealing eight critical trends to watch in 2025.

The Property Outlook Report 2025 highlights key factors influencing both residential and commercial markets this year.

Here are the seven major trends shaping Australian property in 2025:

Anticipated Rate Cuts

Ray White’s Chief Economist, Nerida Conisbee, co-author of the Property Outlook Report, notes that financial markets predict two interest rate cuts by the Reserve Bank of Australia (RBA) later this year. However, this depends on factors like inflation and global economic conditions.

“The key factor is inflation,” she says, pointing out uncertainties like the U.S. election, which could impact global prices and complicate RBA decisions.

Globally, interest rate cuts are being observed in regions like:

• Switzerland
• Sweden
• Canada
• The Eurozone
• The UK
• New Zealand
• The US

While Australia’s property market has been flat for over a year, demand continues to exceed supply. Although mortgage strain persists, many sellers are still able to achieve profits.

Housing Prices

Australia’s housing market in 2025 shows mixed trends. Perth, Southeast Queensland, and Adelaide are thriving, while Sydney and Melbourne face slowdowns.

Factors like strong population growth, high building costs, and potential rate cuts are helping stabilize prices despite challenges.

While large-scale price hikes or dramatic drops aren’t expected, minor corrections (around 5-7%) could occur in some areas, with affordable markets remaining a priority for buyers.

Changes in the Luxury Market

The premium property market is undergoing a significant shift.

According to Ray White’s senior data analyst Adam Go Tian, “The traditional hierarchy of Australia’s luxury property markets is being disrupted, with new regions climbing the ranks.”

Luxury home prices have seen substantial growth over the last five years:

• Sydney: $2.9M to $4M (26% growth)
• Gold Coast: $1.4M to $2.5M (50% growth)
• Melbourne: $2.1M to $2.5M (9.8% growth)
• Sunshine Coast: $1.3M to $2.3M (50% growth)

Emerging as a standout is the “Golden Arc,” spanning the Gold Coast, Brisbane, and Sunshine Coast, now among Australia’s most expensive housing markets.

Regional Growth

The “$1 million club” is expanding across regional Australia. Areas with median property prices above $1 million have surged from two locations in 2019 to 20 in 2024. This growth is expected to continue in 2025, with regions like the Sunshine Coast Hinterland crossing the $1M mark.

For years, smaller capital cities and regional hubs have been gaining momentum, with affordability and lifestyle driving demand. Key areas to watch include the Gold Coast, Newcastle, and Lake Macquarie East.

The Shift in Commercial Spaces

The commercial property market is evolving, with increased demand for high-quality office spaces and growing challenges for secondary-grade properties. Vacancy rates for lower-grade offices could rise to 22%, while prime locations may see vacancies drop significantly, opening opportunities for redevelopment.

The Role of Private Investors

Private investors are expected to support the commercial property sector in 2025. With potential interest rate cuts, transaction activity across all sectors could see renewed momentum.

Conclusion

While 2025 promises growth in certain markets, fluctuations and uncertainties remain part of the cycle. Staying informed and strategic will help you navigate these changes and maximize opportunities in the ever-evolving Australian property market.