Will property prices keep rising in 2025? What homeowners need to know.

At FinancePath, we understand the challenges homeowners are facing with rising costs of living and mortgage repayment pressures. However, amidst these financial stresses, there’s some positive news for property owners. National property prices have continued to see growth, providing homeowners with potential opportunities.

National property prices continue to rise

In October 2024, data from CoreLogic revealed that national property values increased by 0.3%, marking the 21st consecutive month of price growth across Australia. This sustained growth in the property market has seen property values in major cities like Sydney, Brisbane, Adelaide, and Perth reach record highs. In fact, Australia’s residential real estate market recently surpassed a significant milestone, with the total value of properties climbing to $11 trillion for the first time ever.

Will property prices continue to rise in 2025?

As we look ahead to 2025, many homeowners and potential buyers are wondering whether property prices will keep increasing. Here’s what we know:

Price growth has slowed

While the Australian property market has experienced impressive growth for nearly two years, the momentum appears to be slowing. In the September 2024 quarter, national property values increased by just 1%, the slowest rise since March 2023. The annual growth rate also softened, dropping to 6.7%, down from 9.7% earlier in the year.

Experts attribute this slowdown to a number of factors, including increased listing volumes and more cautious buyer behaviour.

CoreLogic Australia Economist Kaytlin Ezzy noted that while the market remains resilient in many areas, the pace of growth has clearly decelerated. She also highlighted that the current lending environment has led to more measured purchasing decisions.

Supply vs. Demand

Whether property prices continue to rise in 2025 will largely depend on the balance between supply and demand. When there are more properties listed for sale, buyers have greater choice, which can lead to less urgency in purchasing and more room for price negotiations. Conversely, when fewer properties are available, heightened competition among buyers can push prices up.

In cities like Perth, Adelaide, and Brisbane, advertised stock levels are still more than 20% below the five-year average for this time of year, which is creating favourable conditions for sellers and supporting price growth in these markets.

Impact of interest rates

Interest rates will continue to play a significant role in shaping the property market in 2025. While the Reserve Bank of Australia (RBA) has kept the cash rate on hold since November 2023, many experts predict that a rate cut may occur in the first half of 2025. If the RBA does reduce the cash rate, borrowing power will increase, potentially spurring more buyer activity. Historically, when borrowing costs decrease, demand in the housing market tends to rise, which could lead to further price growth.

What does price growth mean for existing homeowners?

For current homeowners, rising property values present opportunities to leverage your equity. If your property has gained value, you may now have access to untapped equity, which could be used for a variety of purposes—whether that’s purchasing an investment property, undertaking home renovations, or consolidating debt.

Some homeowners have seen their property values increase dramatically over the life of their mortgage. With a typical 30-year mortgage term, it’s not uncommon for property values to rise substantially, potentially adding significant wealth to your portfolio. If you’re curious about how much equity you’ve built, our team at FinancePath can help you assess your property’s value and explore your options.

The bottom line: What’s next for the property market?

While no one can predict the future with certainty, many economists believe that property prices will continue to rise, albeit at a slower pace, in 2025. A recent report from KPMG projected that house prices would increase nationally by 5.6% next year. This gradual growth could provide opportunities for those looking to buy or sell in the coming year.

If you’re considering a property purchase in 2025, now is the perfect time to start preparing your finances. At FinancePath, our team of experienced mortgage brokers in Melbourne can help you navigate the complexities of the current market, secure the best possible financing options, and plan for your future property goals.

Get in touch with FinancePath today at 1300 780 440 or book a free 10-minute chat to discuss your options and stay ahead of the property market trends.