Industry professionals anticipate house prices to rise in 2025, driven by improving affordability, increasing incomes, and potential interest rate cuts. According to CoreLogic’s annual report, Decoding 2025, 65% of Australia’s real estate professionals expect house prices to climb, with 25% forecasting gains of more than 5%.
The report, based on a survey of over 2,400 real estate agents and finance professionals, analyzed key industry challenges, including market trends, first-home buyer activity, and business priorities. The findings indicate strong optimism, particularly in Queensland, where 70% of respondents predict price growth, fueled by robust internal migration.
Market Outlook: Regional Trends and Interest Rate Impacts
In Melbourne, where median dwelling values have declined by 6.4% from their 2022 peak, agents anticipate a potential recovery due to improving affordability and renewed demand. Meanwhile, mortgage expert Jonathan Preston of Homeloanexperts.com.au noted that increasing housing stock in certain Sydney markets may temporarily curb price growth.
Preston also highlighted the role of the Australian dollar in shaping market conditions:
A stronger AUD could support interest rate cuts, aiding price recovery in Melbourne and Sydney.
Conversely, a weaker AUD could lead to inflationary pressures, limiting the Reserve Bank of Australia's (RBA) ability to lower rates.
“We might see a 5% price decline in Sydney and Melbourne, followed by a rebound once rates are cut,” Preston suggested. “However, if the AUD falls, we risk importing inflation, complicating RBA’s decisions.”
National Trends and Future Performance
CoreLogic’s head of research, Eliza Owen, noted that the economic recovery in late 2024 has set the stage for increased buyer activity. While early 2025 may see some market softening, conditions are expected to improve as interest rates ease, household savings grow, and real incomes rise.
Despite Perth’s rapid growth in recent years, its outperformance relative to other states may moderate. Preston remarked that Perth is no longer the bargain market it once was, predicting that its price trajectory will align more closely with Sydney and Brisbane moving forward.
“I expect Perth’s million-dollar suburbs to increase, but its growth rate will stabilize,” he said. “Looking ahead, Melbourne, Tasmania, and even Byron Bay could emerge as strong performers, with less downside risk and greater upside potential in the next bull market.”
First-Home Buyers and Policy Priorities
First-home buyers continue to face affordability challenges, with 87% of agents reporting extended savings periods and 77% observing greater reliance on parental financial assistance—the so-called Bank of Mum and Dad. Many first-time buyers are adapting by opting for smaller, more affordable properties or embracing ‘rentvesting’—renting in desirable locations while investing elsewhere.
As the 2025 federal election approaches, housing supply is set to become a major policy focus. Nearly two-thirds (63%) of industry professionals identified supply constraints as the top priority for addressing affordability concerns.
“Strategic policies, including faster approvals, increased land release, and incentives for diverse housing types, will be key to tackling supply challenges,” Owen stated. “Clear, supportive measures can boost confidence among buyers and sellers, sustaining market activity.”