Will house prices keep rising in 2025?

Amid cost-of-living pressures and mortgage repayment stress, there has been some good news for homeowners.

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Property prices have continued to rise for months on end across the nation.  

In October, data from CoreLogic showed property values increased by 0.3% nationally. It was the 21^st consecutive month of price growth across the country.

Recently, Australia’s property market also reached a new milestone. For the first time ever, the total value of residential real estate climbed to $11 trillion, according to CoreLogic. Property values in Sydney, Brisbane, Adelaide and Perth are all currently at a record high.

So, will housing prices keep rising in 2025? Let’s take a look at what we know.

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Price growth has slowed

Despite the Australian property market’s impressive track record of price growth for almost two years, there’s no doubt that momentum is slowing.

National property values increased by just 1% in the September quarter, which was the softest quarterly rise since March 2023. The annual growth rate also slowed to 6.7% from a high of 9.7% earlier in the year. All of this points to the fact that the market is cooling.

Experts say increased listing volumes and more cautious buyer behaviour are to blame.  

“While the market remains resilient in many areas, the pace of growth more broadly has clearly decelerated,” CoreLogic Australia Economist Kaytlin Ezzy said recently.

“Buyers and investors are becoming more cautious, and the current lending environment is leading to more measured purchasing decisions.”

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Supply and demand will play a role

Whether property prices keep rising in 2025 will depend on advertised stock levels and overall supply versus buyer demand, among other factors.

When more properties are listed, buyers have more choice and there may be less urgency to purchase. There may also be more room for price negotiations, so prices can drop.

At the other end of the spectrum, when there are fewer properties available to purchase, stronger competition amongst buyers can cause prices to rise.  

Perth, Adelaide, and Brisbane, for example, are still seeing advertised stock levels more than -20% below the five-year average for this time of the year. As a result, conditions are in favour of sellers.

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Interest rates will likely have an impact

The Reserve Bank of Australia (RBA) has kept the cash rate on hold since November 2023, but it’s widely believed we’ll see a cash rate cut in the first half of 2025.

If interest rates do drop, people’s borrowing power will increase. Historically, when this has happened borrowers tend to spend to their maximum budget. This in turn can drive up property prices.

So, if the RBA cuts the cash rate, experts say we may see more competition return to the market, accelerating home price growth.

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What does price growth mean for existing homeowners?

If your property’s value has increased, you may be sitting on untapped equity that you could be using to your advantage.  

Maybe you want to buy an investment property in 2025? Or perhaps you’d like to drive up your property’s value even further with some home reno projects?

When you consider that some homeowners have seen their property’s value quintuple within the timeframe of a typical 30-year mortgage, it’s worth finding out how much equity you have. Get in touch for an estimate.  

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So, what’s the bottom line?

While there’s no crystal ball to predict which way the property market will go, many economists seem to think house prices will continue to rise, albeit more gradually in 2025.

A recent report by KPMG forecast house prices would rise nationally by 5.6% next year.  

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If you’re planning a 2025 property purchase, get in touch now to talk through your finance options.

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