Property prices will continue to rise in the coming financial year, with Sydney’s house prices set to more than double Perth’s.
According to Domain’s FY25 Price Forecast Report, property prices are set to reach new record highs in most capital cities, with house prices tipped to increase between 3 per cent and 6 per cent nationally.
Unit prices are expected to climb between 2 per cent and 4 per cent.
Sydney house prices have been tipped to climb between 6 per cent and 8 per cent to a median forecast of $1.73 million to $1.76 million.
This is more than double Perth, which is expected to have a median house price between $840,000 and $856,000, after nation-leading growth of between 8 per cent and 10 per cent.
Sydney, Perth, Brisbane and Adelaide are all expected to see new house price records reached in the 2025 financial year.
Domain Chief of Research and Economics, Dr Nicola Powell, said while property prices will reach new records, growth will be slower compared to the 2023 calendar year and the 2024 financial year.
“We predict that population growth, construction challenges, and borrowing power will be the key drivers behind the price growth,” she said.
“Demand has risen as housing composition changes, demographic shifts, and robust population growth.
“We have seen an increase in single-person households and a decrease in household size in general (fewer people, on average, living in each household), both amplifying housing demand, further compounded by migration.”
When it comes to units, Sydney, Brisbane and Adelaide are all tipped to experience 4 per cent to 6 per cent price growth, while Perth is likely to have 4 per cent to 5 per cent price growth.
Sydney’s median price forecast for units is $838,000 to $855,000, while Perth’s is $443,000 to $447,000.
“Home building has also struggled to keep up with population growth due to the scarcity of land, weak building approvals, and high construction costs, exacerbating the existing structural undersupply,” Ms Powell said.
“This will lead to an ongoing limited supply of new homes on the market.”
Ms Powell said from July 1, Stage 3 tax cuts would also come into play, giving Australian’s more borrowing capacity and buying power.
“In essence, some may opt to upscale their budgets, potentially making extra auction bids,” she said.
“For others, it could provide that extra borrowing capacity to bring more buyers to the market, speeding up their home ownership journey.
“All three factors will play a role in further driving up Australia’s home prices.”
Dr Powell said while the continued increase in property prices would please homeowners, it was becoming harder for many Australians to enter the property market.
“We urgently need more supply to balance the market and make it more affordable for Australians to own a home,” she said.
“The government has made it clear that housing is a priority focus, but now we need to start seeing all levels of government and industry working together towards a solution.
“In the year ahead it would be good to see an acceleration in development approvals and initiatives such as incentives for construction – particularly for developers to build affordable housing where people want to live and with the infrastructure to support them.
“We should also be looking for better ways to utilise existing housing stock and ensure greater housing density in the right locations.”
