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5 Property Market Indicators to Watch in 2025
Predicting the future of the Australian property market has become a bit of a national pastime. Will prices soar? Will they crash? Will the bubble burst? The truth is, no one has a crystal ball. But as we step into 2025, a confluence of economic forces and market trends are painting a picture of cautious optimism, presenting both challenges and opportunities for buyers, sellers, and investors.
1. Price growth moderation: The new normal?
After the whirlwind of recent years, the consensus among experts points towards a more moderate pace of price growth in 2025. CoreLogic data reveals that national dwelling values rose by a modest 3% in 2024, a significant slowdown from the double-digit growth witnessed in previous years. Economists at ANZ predict a similar trajectory for 2025, citing affordability constraints and the lingering impact of interest rate rises. This moderation could create a more balanced market, offering a breathing space for first-home buyers while still delivering solid returns for long-term investors.
2. Interest rates: A February cut on the cards?
Recent data showing a cooling of inflation has fuelled speculation of a sooner-than-anticipated rate cut. Three of the four major bank forecasters now think a February cut is likely. This would mark the first reduction in nearly five years and could provide a boost to property buyers, especially those who have been waiting on the sideline for cheaper borrowing costs.
None of this is a certainty, however. Only the RBA knows what the RBA is going to do, and they’ll want to be pretty certain that the latest inflation drop data is a trend and not an outlier.
Ultimately, the direction of interest rates will play a key role in shaping the property market in 2025, especially the second half of the year. A couple of rate cuts will very likely boost buyer confidence and seller activity, while a period of stable rates would offer certainty and encourage long-term investment. Regardless of the RBA's decision, it's crucial for buyers and investors to stay informed and adapt their strategies accordingly.
3. The Great Australian rental squeeze: No end in sight
The rental market continues to be a significant pain point for many Australians. Vacancy rates remain stubbornly low across the country, driven by a combination of factors including strong population growth, a shortage of affordable housing, and increasing investor activity. SQM Research data shows that national rental vacancy rates hovered around 1% throughout 2024, well below the 3% considered to be a balanced market.
A shortage of rental housing stock and the time it takes to get new homes to market is exacerbating the pressure that renters are experiencing. We’d love to see more done by policymakers, especially in the area of planning approvals, to address the underlying supply and demand imbalances.
4. Beyond the city limits: The attraction of regional and outer suburban living
The shift towards remote work and flexible lifestyles continues to drive demand for properties in regional and outer suburban areas. These locations offer a combination of affordability, lifestyle benefits, and improved infrastructure, making them increasingly attractive to families and young professionals. This trend is likely to continue in 2025, as people seek to balance cost of living pressures with greater value for money and better quality of life.
At Frasers Property Australia, we’re seeing this play out at a variety of our developments, including Brookhaven in Queensland, Mambourin Green and Five Farms in Victoria, and Ed.Square in New South Wales. These fully masterplanned and self-contained neighbourhoods in the outer suburbs offer residents access to quality housing, local shopping and dining, schools, resident facilities and green spaces, all within easy reach of major cities.
5. The long game: Give it time
While market fluctuations and economic uncertainties can create anxiety for buyers and investors, it's important to remember that property is a long-term game. Historically, Australian property has delivered strong capital growth over time, making it a sound investment for those with a long-term horizon.
Trying to game the market at the optimal moment is an exercise in futility. No one ever agrees on when that moment is until it’s already happened. Instead, it’s better to focus on finding a property in a desirable location with good growth potential and hold it on to it while that potential is realised.
In summary:
If you're considering entering the property market, whether as a first-home buyer or an investor, 2025 presents a unique set of circumstances. While the era of runaway price growth may be behind us (for now), opportunities still abound for those who are informed, adaptable, and focused on the long term. By understanding what's important to you and your family, the key market indicators and seeking expert advice, you can navigate the property landscape with confidence and make informed decisions that could benefit you for years to come.
Emily Wood
Executive General Manager, Development
*Disclaimer: This publication was prepared by Frasers Property Australia. All opinions, estimates, forecasts, projections, conclusions and recommendations and underlying assumptions contained in the publication (Content) are made and expressed by Frasers in good faith, in the reasonable belief they are correct and not misleading as at the date of the publication. The Content may be affected by data and information arising, or unforeseen risks, events or circumstances occurring, after the date of this publication, the likelihood and effect of which is not capable of prior assessment. Frasers has made all reasonable efforts and inquiries it believes necessary in preparing the publication but has not independently verified the data and information on which it has relied (unless otherwise stated) and is not responsible for confirming the completeness or accuracy of such data and information. Frasers accepts no responsibility for the accuracy or completeness of any such data and information and is not, to the extent permitted by law, liable to any person for loss or damage as a result of any error in the Content attributable to such errors or omissions in the data or information, including in or as a result of its reliance on data and information provided by Frasers or another person, other than errors or omissions made by Frasers acting recklessly. The information and data is subject to change without notice and Frasers is under no obligation to update the information or data or correct any Content which may change over time. This publication and its content do not represent financial or other professional advice and should not be regarded as such. Before acting on any information in this publication, you should fully consider the appropriateness of the information, having regard to your objectives, financial or taxation situation and needs and, if necessary, seek appropriate professional advice. This publication is subject to copyright. Except as permitted under the Copyright Act 1968, this publication (and any part of it) may not, in any form or by any means (electronic or mechanical), be reproduced, recorded, introduced into or stored in a retrievals system, transmitted or copied (including photocopied) or otherwise uploaded to the worldwide web without the prior written permission of Frasers. Enquiries should be addressed to the publishers.
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