A period of significant transition is dawning for Australian property in 2025.
Bricks and mortar remains one of the most rock solid investments you can make.
But the boom times of the early part of the decade are well and truly behind us.
A melting pot of factors are influencing trends in Australian property in 2025 including:
- rising interest rates
- cost of living
- government action to address the lack of housing
- the retirement of Baby Boomers
- the growing appetite towards coastal living
- the rise of Perth, Adelaide and Brisbane markets
Auction clearance rates remained below 70 per cent nationally for the 11th straight week to the end of November.
In Adelaide, the figure stood at 66.3 per cent, one point above the national average.
A luxurious four-bedroom home in Urrbrae was passed in without one single bid, despite the auctioneer pleading with a 30-strong crowd to nominate their own opening gambit.
It is not an unusual occurrence around the nation.
Most economists agree the property market will continue to soften in 2025.
But grey forecasts present opportunities.
You just have to know where to look!
Interest rates and the cost of living
Interest rates have undoubtedly put the brakes on the property market although the impact has not been Australia wide.
A reduction in rates next year would almost certainly provide stimulus to the sector and that remains a distinct possibility toward the second half of the year.
Commonwealth Bank and Westpac predict it could come as soon as February, the first of four consecutive 0.25% reductions that would drop the cash rate to 3.35%.
NAB thinks a first cut won’t be due until May with the ANZ now in agreement.
After surging inflation in 2022-23, the annual rate cooled to 2.1 per cent by October, 2024 – a three-year low.
Further reductions in inflation levels will encourage the Reserve Bank to pull the trigger on that first interest rate cut.
If you are thinking of selling your property, you may well be encouraged to hold on until that first interest rate cut to boost your potential sale price.
The housing shortage
Australia’s net overseas migration for the year ending March 2024 was 509,800.
It came on the back of a record 547,200 people the previous year.
That means one in every 25 Australians today arrived here from overseas in the last two years.
And they have to live somewhere.
But there are many other factors influencing the housing shortage such as:
- labor shortages and expenses
- higher material costs
- limited land releases
- slow planning laws
- rental market preferring short stays over traditional leases.
The federal government has responded with a pledge to build 1.2 million new homes between 2024-28.
It has also handed $2 billion to state governments to increase the social housing numbers.
The retirement of Baby Boomers
Boomers own half of Australia’s private wealth.
When they spend their money, the markets notice.
By next year, the youngest Boomer will have access to their superannuation.
Already, many have been prompted into action.
They are expected to have a growing impact on trends in Australian property in 2025.
A great number are choosing to downsize their homes, buy investment properties or are helping their children or grandchildren buy a home.
The federal government has incentivised anyone 55 years and older to downsize their homes in a bid to create housing for younger families.
The incentive allows a tax free contribution into super of up to $300,000 per individual or $600,000 per couple.
Coastal living
Aussies love the beach.
And that love is only growing stronger as more seek to live by the coast.
Coastal properties have consistently shown higher price growth, regardless of their price bracket.
Capital city coastal suburbs grew by 10.9% in 2023-24 compared to 8.3% across all suburbs.
Queensland’s Sunshine Coast is booming with an 11.8% net migration from all capital cities.
Gold Coast, the NSW Central Coast and Greater Geelong are all gaining residents at the expense of their nearby capitals.
Victor Harbor, Port Elliot and Goolwa have long been popular summer havens for South Australians but more people are moving there permanently.
Victor’s population alone is expected to climb by a third over the next decade as Boomers and downsizers flock to the region.
Property on the Fleurieu Peninsula is hot, especially if it comes with a sea view.
The boom of second-tier cities
The annual rise in national dwelling values to September, 2024 of 6.7% has been sustained entirely by Perth, Adelaide and Brisbane.
Perth has boomed 24.1% with Adelaide (14.8%) and Brisbane (14.5%) performing way above expectations.
The median values in all three cities have now surpassed Melbourne which suffered a 1.4% fall to incredibly become Australia’s third most affordable city.
Only in Hobart or Darwin will you find cheaper housing.
The bullish returns in Perth, Adelaide and Brisbane exist for several reasons:
- a market correction of what has been traditionally undervalued housing
- demand for housing in these three capitals exceeding supply
- the abandonment of Melbourne and Sydney in favour of Australia’s second-tier cities
Melbourne in particular may offer some housing bargains for shrewd investors before a potential interest rate cut sparks its revival.
Get the best property finance approach
It’s always difficult knowing when to buy real estate.
Those who missed out during the housing price boom were then confronted by a succession of rising interest rates and many must have wondered whether they had missed their opportunity.
No-one knows exactly how the landscape will unfold for Australian property in 2025.
But the reality is that whether you are an investor or prospective owner-occupier, the best time to buy Australian property is today!
And when you need finance for that property purchase, you should look no further than Calder Finance Broking.
We have years of experience in the lending industry, having built strong and trusted relationships with a multitude of lenders for your benefit.
We can help you secure the very best loan with premium features tailored specifically to your personal needs.If a better deal arises, you will be the first to know, giving you the opportunity to refinance.
Contact Calder Finance today to discuss all of your financial needs and mortgage requirements.
The information contained in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
Taxation, legal and other matters referred to on this website are of a general nature only and are based on Calder Wealth Management’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.
Calder specialises in wealth management with a focus on advice, investment, sustainability, insurance and finance.
Written by David Titley from Calder Finance Broking, for more information please visit the Calder Finance website. Please note that Calder Finance Broking Pty Ltd is a Corporate Credit Representative of BLSSA Pty Ltd ABN 69 117 651 760 ACL 391237.
