According to a recent report by Domain, the Australian property market is expected to see continued growth in FY25, although at a slower pace compared to the previous year. This growth will be driven by factors such as constrained supply, high construction costs, and strong population growth, particularly due to migration. Key regions like Sydney, Perth, Adelaide, and Brisbane are forecasted to lead in house price gains, with some areas potentially reaching record highs. However, affordability and serviceability issues remain significant challenges for many households.
House Price Forecasts
Domain's forecast indicates that house prices in major cities such as Sydney, Perth, Adelaide, and Brisbane are expected to reach new records by the end of FY25. In Sydney, the median house price is projected to surpass $1.7 million, while Perth and Brisbane may see prices nearing $1 million. Adelaide is also on track to break the $1 million mark by the end of 2025. Meanwhile, Melbourne's housing market is expected to remain stable, with weaker demographic shifts and improved supply contributing to a more moderated growth. In Canberra, house prices are anticipated to continue their slow recovery, marking the city's slowest rebound on record.
Unit Price Forecasts
In the unit market, Domain predicts that Sydney, Brisbane, and Adelaide will lead price gains, with unit prices in these cities expected to reach new highs. The growth in unit prices is anticipated to be more pronounced in Melbourne and Canberra, where unit price growth may outpace that of houses. This trend reflects the ongoing demand for more affordable housing options in these cities, despite the broader challenges facing the housing market.
Supply Constraints and Population Growth
One of the key drivers of the forecasted price increases is the ongoing issue of constrained supply. Domain highlights that weak building approvals, high construction costs, and limited land availability are contributing to the scarcity of housing, particularly in high-demand areas. This shortage is expected to continue putting upward pressure on property prices in FY25.
At the same time, Australia's growing population, bolstered by strong migration, is expected to sustain demand for housing. This demand is likely to be particularly strong in major cities and high-growth regional areas, where the combination of limited supply and increasing population will continue to drive price growth.
Affordability Challenges and Market Strain
Despite the expected growth in property prices, affordability remains a major concern for many Australians. The rising cost of purchasing a home, coupled with higher interest rates, is making it increasingly difficult for households to enter the market. Those who have already purchased homes are facing the challenge of servicing their mortgages in an environment of rising interest rates and broader cost-of-living pressures.
According to Domain, these affordability and serviceability issues are likely to become more acute as interest rates remain high and property prices continue to rise. This creates a challenging environment for both prospective buyers and current homeowners, as they navigate the pressures of a market under strain.
The Rental Market: High Demand and Low Vacancy
Domain also notes that the rental market in Australia is under significant pressure, with historically low vacancy rates and record-high rents creating a difficult environment for renters. This has led to an increasing number of renters seeking to fast-track their home purchases, adding further demand to an already tight housing market.
As more renters move toward homeownership, the supply-demand imbalance is likely to worsen, putting additional upward pressure on property prices. For those who remain in the rental market, the outlook remains challenging, with rents expected to stay high and availability limited.
Conclusion: A Complex Outlook for FY25
The Australian property market in FY25, as reported by Domain, is expected to be characterized by a push-pull dynamic between affordability and availability. While property prices are forecasted to rise, driven by supply constraints and strong population growth, the challenges of affordability and serviceability will continue to weigh heavily on households.
For prospective buyers, navigating this market will require careful consideration of their financial situation and the potential risks associated with rising interest rates and ongoing cost-of-living pressures. Homeowners, on the other hand, will need to manage the impact of these challenges while keeping an eye on potential opportunities as the market evolves.
Overall, the Australian housing market in FY25 will remain under significant strain, with both homeowners and renters facing a challenging environment. The interplay between supply, demand, and economic factors will be critical in shaping the trajectory of property prices over the coming year.
What we think as a Real Estate Agency in Kensington, Melbourne?
As a real estate agency, we see the FY25 market as both a challenge and an opportunity. With constrained supply and rising prices, it's crucial for buyers to be strategic and informed. While affordability remains a concern, the strong demand driven by population growth and limited inventory suggests that investing in Kensington could yield solid returns.
With our decades of experience, we are committed to guiding our clients through these market dynamics, ensuring they make sound decisions in this evolving landscape.
For more detailed insights and forecasts, please refer to the full Domain report here.
According to a recent report by Domain, the Australian property market is expected to see continued growth in FY25, although at a slower pace compared to the previous year. This growth will be driven by factors such as constrained supply, high construction costs, and strong population growth, particularly due to migration. Key regions like Sydney, Perth, Adelaide, and Brisbane are forecasted to lead in house price gains, with some areas potentially reaching record highs. However, affordability and serviceability issues remain significant challenges for many households.
House Price Forecasts
Domain's forecast indicates that house prices in major cities such as Sydney, Perth, Adelaide, and Brisbane are expected to reach new records by the end of FY25. In Sydney, the median house price is projected to surpass $1.7 million, while Perth and Brisbane may see prices nearing $1 million. Adelaide is also on track to break the $1 million mark by the end of 2025. Meanwhile, Melbourne's housing market is expected to remain stable, with weaker demographic shifts and improved supply contributing to a more moderated growth. In Canberra, house prices are anticipated to continue their slow recovery, marking the city's slowest rebound on record.
Unit Price Forecasts
In the unit market, Domain predicts that Sydney, Brisbane, and Adelaide will lead price gains, with unit prices in these cities expected to reach new highs. The growth in unit prices is anticipated to be more pronounced in Melbourne and Canberra, where unit price growth may outpace that of houses. This trend reflects the ongoing demand for more affordable housing options in these cities, despite the broader challenges facing the housing market.
Supply Constraints and Population Growth
One of the key drivers of the forecasted price increases is the ongoing issue of constrained supply. Domain highlights that weak building approvals, high construction costs, and limited land availability are contributing to the scarcity of housing, particularly in high-demand areas. This shortage is expected to continue putting upward pressure on property prices in FY25.
At the same time, Australia's growing population, bolstered by strong migration, is expected to sustain demand for housing. This demand is likely to be particularly strong in major cities and high-growth regional areas, where the combination of limited supply and increasing population will continue to drive price growth.
Affordability Challenges and Market Strain
Despite the expected growth in property prices, affordability remains a major concern for many Australians. The rising cost of purchasing a home, coupled with higher interest rates, is making it increasingly difficult for households to enter the market. Those who have already purchased homes are facing the challenge of servicing their mortgages in an environment of rising interest rates and broader cost-of-living pressures.
According to Domain, these affordability and serviceability issues are likely to become more acute as interest rates remain high and property prices continue to rise. This creates a challenging environment for both prospective buyers and current homeowners, as they navigate the pressures of a market under strain.
The Rental Market: High Demand and Low Vacancy
Domain also notes that the rental market in Australia is under significant pressure, with historically low vacancy rates and record-high rents creating a difficult environment for renters. This has led to an increasing number of renters seeking to fast-track their home purchases, adding further demand to an already tight housing market.
As more renters move toward homeownership, the supply-demand imbalance is likely to worsen, putting additional upward pressure on property prices. For those who remain in the rental market, the outlook remains challenging, with rents expected to stay high and availability limited.
Conclusion: A Complex Outlook for FY25
The Australian property market in FY25, as reported by Domain, is expected to be characterized by a push-pull dynamic between affordability and availability. While property prices are forecasted to rise, driven by supply constraints and strong population growth, the challenges of affordability and serviceability will continue to weigh heavily on households.
For prospective buyers, navigating this market will require careful consideration of their financial situation and the potential risks associated with rising interest rates and ongoing cost-of-living pressures. Homeowners, on the other hand, will need to manage the impact of these challenges while keeping an eye on potential opportunities as the market evolves.
Overall, the Australian housing market in FY25 will remain under significant strain, with both homeowners and renters facing a challenging environment. The interplay between supply, demand, and economic factors will be critical in shaping the trajectory of property prices over the coming year.
What we think as a Real Estate Agency in Kensington, Melbourne?
As a real estate agency, we see the FY25 market as both a challenge and an opportunity. With constrained supply and rising prices, it's crucial for buyers to be strategic and informed. While affordability remains a concern, the strong demand driven by population growth and limited inventory suggests that investing in Kensington could yield solid returns.
With our decades of experience, we are committed to guiding our clients through these market dynamics, ensuring they make sound decisions in this evolving landscape.
For more detailed insights and forecasts, please refer to the full Domain report here.