Heading into 2025, the Australian property market is not a single entity—it's a "two-speed" market, with some cities seeing impressive growth while others are slowing down. This article breaks down the key trends, revealing which markets are hot and which are not, and why factors like interstate migration, housing supply, and even state taxes are creating vastly different outcomes across the country.
As we come to the end of another eventful year for property, it's clear that we're experiencing a two-speed market, and that prices are slowing in both, according to Ray White Chief Economist Nerida Conisbee.
Ms Conisbee said the weakest markets were Sydney, Canberra, Melbourne and Hobart, with their median prices having increased by an average of 2.9% over the year to October. “This is much less than the peak 6.7% experienced in the 12 months to February 2024,” she said.
Ms Conisbee said the strongest markets were Brisbane, Perth and Adelaide, where prices rose by an average of 13.2% over the year to October. “While this is much less than the 18.9% experienced in the 12 months to May 2024, the increase is still extremely strong.”
Weakest markets
Sydney, which has the country's highest property prices, is really feeling the impact of higher interest rates, according to Ms Conisbee. “While more affordable properties are still seeing decent growth, the luxury market has notably softened. Any significant market revival will likely need to wait for interest rate cuts, expected in early 2025,” she said.
Canberra, which also has very high prices, is also affected by interest rates, but, unlike Sydney and other cities, is not facing a housing shortage, making conditions more buyer-friendly. “The ACT Government's efforts to make Canberra an affordable city through high levels of housing supply appear to be working,” Ms Conisbee said.
Melbourne faces multiple challenges, according to Ms Conisbee. “Beyond interest rate sensitivity, the Victorian economy shows signs of recession, and property owners are dealing with the country's highest property taxes.”
Hobart's main problem is demography. “With population growth at low levels and forecasts suggesting this trend will continue, particularly as a result of plunging interstate migration, the market faces ongoing pressure,” Ms Conisbee said. “While interest rate cuts would help, the fundamental population challenge remains significant.”
Strongest markets
Brisbane, along with the Gold Coast and Sunshine Coast, is continuing its impressive run, in part because south-east Queensland is soaking up interstate and international migrants. “With housing supply falling short of demand and strong market confidence, prices continue to rise across all segments,” Ms Conisbee said.
Perth also has a strong market, with both prices and rents rising, according to Ms Conisbee. “While some of this represents catch-up growth, the combination of population increases and rising construction costs continues to limit supply.”
Adelaide is benefitting from a range of strengths. “Strong state government leadership has boosted confidence, driving investment and tourism growth,” Ms Conisbee said. “Perhaps most significantly, Adelaide's median house price – at half of Sydney's – makes it increasingly attractive for interstate migrants seeking value, as well as investors.”
Looking forward to 2025
Ms Conisbee forecast that the two-speed market would continue into 2025.
“Local economic conditions, population trends and housing supply are playing crucial roles in determining each city's path,” she said.
“As we head into a lower interest rate environment, it's becoming increasingly clear that understanding these regional differences is key.”
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