House prices in 2024 have been slightly weaker than 2023, influenced by the ongoing cost-of-living crisis, high interest rates, and housing affordability issues.
National house price growth is expected to be modest in 2025, at a slightly lower level than in 2024. KPMG forecasts national house and unit prices to continue to rise by 3.3% for houses and 4.6% for units in 2025.
Key insights into Australia’s residential property market
House prices are slowing
National house prices increased by 5.1% in 2024. However, the market is slowing down. National growth in the December quarter 2024 was flat, marking the weakest quarterly outcome since March 2023.
Rental prices have moderated, but stay strong
Rental price growth has moderated from a peak of 7.8% in March 2024 to 6.7% in September. Despite this slowdown, the continued strong growth in rental prices indicates that vacancy rates remain low, and the rental market is still tight.
Interest rates will continue to influence house prices
Buyers have been cautious throughout 2024 because of uncertainty surrounding possible movement in the cash rate. There are three potential scenarios: the rate could increase, remain unchanged, or decrease.
Although rate cuts are eagerly anticipated, they are not expected until Q2 2025. When they do occur, these cuts are likely to boost homebuyer confidence in the second half of 2025 and continue into 2026.
Australia’s labour market remains stable
The resilient labour market also contributes to overall stability in the housing market. It has helped mitigate the impact of the so-called ‘mortgage cliff’. Though there has been a slight increase in mortgage distress and arrears, the average level remains low.
Download: Residential Property Market Outlook – January 2025
KPMG’s analysis of the national dwelling market.
Download report (PDF 4.2MB)Previous edition
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