According to Ray White’s Property Outlook Report, the Reserve Bank of Australia is expected to implement rate cuts in the latter half of 2025, offering relief to struggling households amid ongoing cost of living pressures.
The residential market is expected to show modest growth, driven by population increases and high building costs, with Perth and Adelaide leading the way while Sydney and Melbourne may plateau until rate cuts begin.
Chief Economist at Ray White, Nerida Conisbee, said there was a delicate balance facing the RBA.
“While inflation is now within the RBA’s target range, the risk of resurgence remains, particularly with global economic factors at play,” Ms Conisbee said.
Queensland’s coastal regions are emerging as new powerhouses in the luxury market, with the Gold Coast now ranking as Australia’s second most expensive luxury market, surpassing Melbourne.
The commercial sector is seeing retail property emerge as a standout performer, supported by strong population growth and changing consumer behaviour.
Vanessa Rader, Head of Research at Ray White, said the sector is showing strength.
“Retail has shown remarkable resilience, with neighbourhood centres anchored by supermarkets and essential services leading the charge,” Ms Rader said.
Private investors are expected to drive the commercial property market’s resurgence, particularly in neighbourhood retail centres and industrial assets.
David McQueen, CEO of Loan Market, said 2025 will be important for private capital:
“Private capital’s agility and ability to adapt quickly to emerging opportunities will be critical in a more favourable lending environment,” Mr McQueen said.
Secondary office markets face significant challenges as tenants increasingly demand premium-grade amenities and sustainability credentials.
“Buildings unable to meet these rising expectations risk becoming stranded assets,” Ms. Rader said.
“The shift to hybrid work has permanently altered tenant expectations, making significant upgrades a necessity for survival.”
