Speculating on what will happen to property prices in the year ahead is a favourite pastime of Australians, especially over the summer break.
Skyrocketing property prices over the past 22 months – particularly in major cities like Sydney, Melbourne and Brisbane – have made real estate a constant taking point. Parts of South Australia, Western Australia and southeast Queensland are also attracting solid interest from investors.
After a prolonged period of attractive gains and high yields, one thing is clear: we all wish we had a crystal ball to reveal where the market is heading next.
Property prices don’t just represent opportunities for buyers and sellers; they also reflect what’s happening in the broader community. According to CoreLogic, despite elevated interest rates and global uncertainty in 2024, the Australian housing market demonstrated remarkable resilience. So, let’s take a look at what could be in store for the year ahead including hotspots.
What role will interest rates have on sales?
An above-average number of listings is set to keep property sales active in 2025, but market performance will hinge on when the Reserve Bank of Australia decides to lower interest rates.
“Interest rate will heavily influence market performance in 2025, and the impact will be dependent on the timing and the depth of the cut,” Mr Tiller said.
“An earlier announcement and a significant reduction will likely strengthen the market, while prolonged rate stability at elevated levels may soften conditions.”
Will the Federal Election have any impact on the market?
According to the LJ Hooker Group, the 2025 Federal Election will have a minimal market impact with both major parties lacking transformative housing policies. Housing supply remains constrained due to high construction costs, labour shortages and lengthy planning processes.
“Government action on housing supply by dramatically improving the feasibility of building new homes will be critical to addressing the longer-term supply imbalance,” Mr Tiller said.
“We need our politicians to step up with direct funding for house projects, streamlined planning systems, reduced taxes and levies, and increased skilled construction worker immigration, especially for regional areas.”
Is the property market likely to be competitive in 2025?
Homeowners are likely to look to take advantage of recent price growth in the year ahead, while buyer demand should remain consistent, driven by strong population growth, rising wages, tight rental demands and a shortage of newly constructed houses.
Listings were 10 per cent above average during a highly active spring season, and real estate agents are expected to remain busy in 2025.
Sellers will likely fall into two groups in the New Year: those listing early to capture post-holiday demand and those waiting for rate cuts to boost buyer activity and sales price.
“Likewise, we will also have two groups of buyers,” Mr Tiller said.
“Some will be looking at entering the market early, anticipating increased competition once rates are cut. Others are waiting for reduced interest rates to improve borrowing capacity and ease household budget pressures.”
Auction campaigns are expected to remain popular in 2025, with vendors likely to take an attractive early offer depending on the level of interest.
“This is the beauty of an auction campaign, you can sell before, on the day or afterwards – so you have three chances,” Mr Tiller said.
What is happening in the investor market?
Buying an investment property is still seen as a positive strategy for building wealth and a secure financial future. It can enhance case flow, provide valuable tax benefits and is often considered a more stable option.
More recently, investors have been de-leveraging portfolios under cashflow pressure from high interest rates, with those who have purchased in Victoria particularly impacted by new taxes and regulations.
Some investors, however, have diverted their attention to high-growth regions in South Australia, Western Australia and southeast Queensland – a trend expected to continue in the year ahead.
Property hotspots for 2025
Price growth will continue to vary across Australia in 2025, influenced by geography, property type, and price point, creating unique opportunities in different markets. Certain tell-tale signs can reveal when a suburb or region is on the verge of a property boom.
A hotspot suburb is a growing area with strong growth potential, driven by factors like population growth, employment opportunities, infrastructure, amenities, services and high demand and low supply.
Affordable towns such as Toowoomba, located just over an hour west of Brisbane, are among regional areas to watch in 2025.
Agent Ben Barrowcliff from LJ Hooker Toowoomba said infrastructure across the region, including a new hospital and strong local employment, is bringing families and investors to the town. In addition, both State and Federal Governments are investigating the feasibility of a Toowoomba to Gladstone rail extension.
Mr Barrowclift said it is possible to buy a three-bedroom and one-bathroom freestanding home for $550,000 on Toowoomba’s western corridor. This typically fetches a rental return of around $550 to $600 per week.
“Anything available for lease goes very quickly, and that’s driving interest from investors who are looking to hold for a few years,” Mr Barrowclift said.
“We currently have a shortage of land development, and the number of homes being built compared to the people coming here is not in proportion, it is bordering on a housing crisis.”
“It is not just affordability bringing people here, Toowoomba also offers a wonderful lifestyle. I migrated here from England, and the town has a great climate, lovely people, and it is just easy living and within reach of Brisbane.”
2025 State & Territory Property Forecast
2025 New South Wales Property Forecast
Investors and owner-occupiers upgrading to larger homes will dominate to take advantage of high listings and slower price growth.
First-home buyers are active in outer suburbs.
Metro hotspots: Mosman, Freshwater, Blacktown, Wattle Grove
Regional hotspots: Orange, Warrawong
2025 Victoria Property Forecast
Improving rental yields and growing affordability are set to draw interest from investors and first-home buyers.
Metro hotspots: Werribee, Frankston
Regional hotspots: Geelong, Ballarat
2025 Queensland Property Forecast
Infrastructure projects ahead of the 2032 Olympics continue to attract investors and interstate migrants which will see price growth remain above average.
Metro hotspots: Coorparoo, Springfield Lakes
Regional hotspots: Toowoomba, Nambour
2025 South Australia Property Forecast
Owner-occupiers, investors and retirees are drawn to Adelaide’s affordability and lifestyle and should continue into 2025. Price growth is expected to moderate as listings pick up.
Metro hotspots: Hillcrest, Seacliff
Regional hotspots: Port Lincoln
2025 Western Australia Property Forecast
Ongoing strong rental yields will continue to attract investors. There is an undersupply of new homes and listings, although solid economic activity will see price growth remain strong.
Metro hotspots: Innaloo
Regional hotspots: Busselton, Geraldton
2025 Tasmania Property Forecast
Market will hold steady in 2025 and will see an uplift in activity once interest rates fall. Demand from retirees and lifestyle buyers seeking affordability in regional and coastal areas.
Metro hotspots: Kingston
Regional hotspots: Devonport, Launceston
2025 Northern Territory Property Forecast
Investors and first-home buyers are drawn by low entry prices. There are solid levels of investment in energy, mining and defence moving into the NT over the coming years. This will in turn see a more active property market as population and employment levels rise.
Metro hotspots: Parap, Zuccoli
Regional hotspots: Braitling
2025 Australian Capital Territory Property Forecast
Ongoing demand from public sector employees and contractors. Looking forward, post-election confidence and potential rate cuts may bring investors back to the market.
Metro hotspots: Kambah, Wright, Amaroo
Are you curious about what your property may be worth in 2025? Align yourself with experts who can provide the right professional advice. Book in for a property appraisal from your local LJ Hooker agent here.
DISCLAIMER - The information provided is for guidance and informational purposes only and does not replace independent business, legal and financial advice which we strongly recommend. Whilst the information is considered true and correct at the date of publication, changes in circumstances after the time of publication may impact the accuracy of the information provided. LJ Hooker will not accept responsibility or liability for any reliance on the blog information, including but not limited to, the accuracy, currency or completeness of any information or links.
