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The majority of Australia’s real estate professionals are optimistic about the housing market in 2025, with 65 per cent predicting that house prices will rise.
This growth is expected to be driven by improving affordability, rising incomes, and the potential for cuts to interest rates, according to CoreLogic’s annual report Decoding 2025.
The report, which surveyed over 2,400 real estate agents and banking and finance professionals, examined key industry challenges such as the housing market, first home buyer trends, and business priorities.
It revealed that two-thirds of respondents expect house prices to increase, with 25 per cent forecasting gains exceeding 5 per cent.
Queensland stands out as the most promising market, with 70 per cent of respondents predicting price growth in the Sunshine State in 2025, bolstered by strong internal migration trends.
In Melbourne, where CoreLogic data showed the median dwelling value has fallen by 6.4 per cent from its 2022 peak, agents are hopeful for a potential recovery, citing improving affordability and renewed demand.
Homeloanexperts.com.au senior mortgage broker Jonathan Preston commented on how the Aussie dollar could affect both Melbourne and Sydney’s house prices in the coming months: “We seem to be seeing a lot more stock coming to market in some pockets of Sydney. This may temporarily depress price growth.”
However, should the Aussie dollar strengthen, this would be supportive of rate cuts and in turn help support the Melbourne market, according to Preston.
“[M]aybe we see a downturn of 5 per cent in prices for Sydney and Melbourne, and then rate cuts reverse the drop later. The problem is that if the Aussie dollar drops, we import inflation,” he said.
“Every time AUD drops, everything priced in USD becomes more expensive for Aussies to buy, so we are effectively importing inflation when we have a low AUD. If the RBA cuts the rate, AUD drops and inflation pops back up, which is not what the RBA wants.
“We are balancing inflation, employment and currency and a surging USD weakens our ability to cut rates. I mean, if we have a rate cut and it puts AUD down to about 58 US cents, then inflation will pop back up and we would need to increase rates again.
“If we were up at 70 or 80 US cents, we would maybe be in a cleaner position for 2–3 cuts.”
CoreLogic’s head of research Eliza Owen said that the economic recovery in late 2024 has set the stage for increased buyer activity in the year ahead. She said the survey results align with the outlook shared by CoreLogic and many leading economic commentators from major banks.
“Improving household savings and easing interest rates are expected to drive demand later in 2025, even as supply challenges persist,” Owen said.
“Despite some softening in the market in early 2025, it is expected conditions could pick up later in the year alongside lower interest rates, higher real income growth and improved affordability in markets like Melbourne.
“While we do expect values to finish 2025 higher, the pace of increase will probably be softer than the 4.9 per cent achieved in 2024.”
Perth, which has seen tremendous growth over the last couple of years, is not expected to continue to outperform other states as significantly throughout the year, Preston said.
“Perth is no longer cheap, like it once was,” Preston said.
“My expectation is that the number of suburbs in the $1 million club will continue to climb in Perth, but the growth rate will moderate and perhaps be more in line with, say, Sydney or Brisbane for the coming few years.
“I believe the days of outperformance from Perth, Brisbane and South Australia are coming to an end. Looking forward, strong performers will be Melbourne, Tasmania and maybe even Byron eventually – strong performers in a relative sense, meaning less downside and greater upside capture during the next bull market. I think, right now, we are moving into a bear market.”
The Bank of Mum and Dad also remains a significant factor in the market. The survey found that 87 per cent of agents reported longer savings periods for first home buyers, while 77 per cent observed a growing reliance on financial assistance from parents.
Despite these challenges, agents said that first home buyers are adapting by seeking smaller, more affordable properties or adopting a ‘rentvesting’ strategy – renting in desirable areas while investing in properties elsewhere.
Looking towards 2025, the federal election is expected to bring housing supply into sharp focus. Nearly two-thirds of respondents (63 per cent) identified housing supply as the top policy priority to address affordability challenges.
“Strategic housing policies targeting faster approvals, increased land release, and incentives for diverse housing types will be critical in addressing supply constraints,” Owen said.
“Clear, supportive measures can instil confidence in buyers and sellers, driving sustained activity across the property sector.”
[RELATED: Internal migration a boon for regional housing markets]
