2025 property outlook: What's in store for the property market

As we step into 2025, the Australian property market looks set to showcase a range of challenges and opportunities for buyers, sellers and investors. Factors like interest rates, migration trends and evolving rental conditions all contribute to shaping the year ahead. Here’s what to expect for residential real estate in 2025. 

Residential real estate market

Hockingstuart’s insights reveal that the 2025 property market will be balancing several issues. High interest rates have dampened some buyer enthusiasm, while in other areas limited housing supply and continued migration are keeping demand strong. CoreLogic’s November 2024 data showed a 5.5% increase in home values nationwide, a trend likely to extend into 2025. The rental market remains competitive, driven by low vacancy rates and rising rents, while potential interest rate reductions later in the year could re-energise market activity. 

State insights: Australia's property market

New South Wales Property Outlook 

The New South Wales metropolitan property market saw increased stock levels towards the end of 2024, largely driven by the impact of higher interest rates. This rise in supply has slowed market activity, putting downward pressure on prices and providing more choice for buyers. Despite this, demand for premium suburbs such as Mosman and Vaucluse remains strong, fuelled by foreign investment and stable buyer confidence.  If interest rates decrease in 2025, buyer confidence is expected to improve, potentially stabilising prices.   

Regional New South Wales faces challenges as it transitions into 2025. Following a significant price surge during the COVID era, many areas are struggling to maintain momentum as businesses call more employees back to metropolitan offices. Lifestyle properties and holiday homes have been particularly impacted by rising costs and reduced disposable income, with this trend expected to persist through the first half of 2025.

Victoria Property Outlook 

The Victorian residential property market has demonstrated resilience, and real estate in Melbourne is strong despite affordability challenges and interest rate pressures. Inner and middle-ring suburbs have shown sustained strength, driven by population growth, a tight rental market and ongoing infrastructure development. The city’s inner suburbs, supported by infrastructure developments and rental demand, are set for modest growth even though there are affordability pressures.  

Regionally, growth is expected to continue into 2025, making regional Victoria an attractive market. Buyers, investors and developers will all benefit from understanding local demand trends, upcoming infrastructure projects and the unique area dynamics to make informed decisions in the year ahead.  

Queensland Property Outlook 

Forecasted to lead national growth, Brisbane’s property values could rise by up to 14% in 2025, driven by strong demand and affordability appeal, with confidence in Queensland’s long-term growth potential, infrastructure investment and lasting attraction. 

The outlook for Queensland’s regional property market in 2025 is positive, driven by affordability and lifestyle appeal. While 2024 saw moderated activity, the recent election of a new LNP government has injected fresh optimism, with a focus on regional development and infrastructure investment. 

South Australia Property Outlook 

South Australia’s property market has shown resilience as we transition into 2025, with Adelaide experiencing stable property values following post-pandemic growth. Despite high interest rates, demand remains strong in well-connected suburbs, particularly among first-home buyers and downsizers. Regionally, the timing of interest rate cuts remains a key factor influencing the SA market with further demand-side pressure expected until the supply/demand equation rebalances.  

Western Australia Property Outlook 

Perth’s property market ended 2024 with the highest monthly stock levels in over three years, according to REIWA. In regional WA, stock levels have also increased, with price growth easing slightly in traditional residential areas. Seasonality and location appeal is expected to drive further buyer interest in these locations, reinforcing strong market conditions for the first half of 2025.  

2025 rental market trends

The 2025 rental market is poised for increased competition. As vacancy rates remain low, tenants may face rising rents, particularly in metropolitan areas. Investors are likely to find attractive opportunities in growth regions like Brisbane and Adelaide, where rental yields remain strong. In Western Australia, vacancy rates remain exceptionally low, driving rents higher — a trend likely to persist into 2025. 

Looking ahead

While challenges such as affordability pressures and policy changes remain, there are plenty of opportunities for informed buyers and investors for the year ahead. A potential reduction in interest rates in 2025 could revitalise the market further, making this a year of cautious optimism for residential real estate. Understanding these trends will be critical for navigating this dynamic property landscape. 

For more insights into market trends, explore Hockingstuart’s articles here or contact your local Hockingstuart expert for insights and service that are tailored to your real estate goals.