Australian Property Market in 2025: Rising Prices and Supply Challenges Shape Housing Landscape

Market Overview and Current Trends

Australia’s property market in 2025 is being primarily driven by strong population growth and insufficient housing supply, creating upward pressure on both house prices and rents.

While the market shows positive momentum, house price growth in 2025 is expected to be more moderate compared to 2024, which saw a national average increase of 5.1%.

Regional Performance and Price Forecasts

Different regions are showing varied performance levels, with Perth leading at 4% projected growth for houses, while Canberra and Melbourne are expected to achieve solid growth of 3.5% each. Sydney is forecasted to see a more modest 3.3% increase, followed by Brisbane at 3.1%.

The property market has shown renewed vigor, with major capital cities Sydney and Melbourne driving national trends, particularly due to their heightened sensitivity to interest rate changes.

Housing Affordability and First-Home Buyers

First-home buyers face significant challenges, with 87% of agents reporting longer saving periods required for deposits. In response, many buyers are adapting by choosing smaller properties or engaging in ‘rentvesting’ – renting in preferred areas while investing elsewhere.

Government Initiatives and Market Support

The market is receiving additional stimulus through government initiatives, including changes to the Home Guarantee Scheme. From October 2025, buyers can access the scheme with just a 5% deposit without paying lenders mortgage insurance. The program has been expanded to include permanent residents, non-couples buying together, and investors purchasing outside their city of residence.

Future Outlook

Price growth is expected to become more pronounced in the latter half of 2025, coinciding with anticipated interest rate cuts projected for the end of the second quarter. Unlike previous property cycles, this upswing is characterized by subtle shifts in momentum, affordability limits, and policy intervention, rather than dramatic growth spurts.

Experts agree that the undersupply of properties will remain a persistent challenge, with construction targets falling short of demand requirements. This ongoing supply-demand imbalance will likely continue to influence market dynamics in the coming years.