Login
iscover
Australian property sales are expected to stay strong in the year ahead, driven by robust buyer demand and price growth, with the timing of interest rates crucial to market performance.
The LJ Hooker Group has predicted that an above-average number of listings will keep Australian property sales strong in 2025, although the market’s performance will depend on when the Reserve Bank of Australia (RBA) begins lowering interest rates.
Home owners are expected to take advantage of recent price growth in the year ahead, with steady buyer demand driven by strong population growth, steady employment, rising wages, low rental vacancy rates and a critical shortage of newly constructed homes.
Commenting on the outlook for 2025, LJ Hooker’s head of research Mathew Tiller said the “higher for longer” interest rate environment is putting pressure on household budgets and mortgage holders.
“Interest rates will heavily influence market performance in 2025, and the impact will be dependent on the timing and depth of rate cuts,” Tiller said.
Nevertheless, Tiller emphasised that the RBA is “unlikely to take any action before May due to persistent inflation, robust employment markets and global economic uncertainty”.
“An earlier announcement and a significant reduction will likely strengthen the market, while prolonged rate stability at elevated levels may soften conditions,” he said.
Tiller also noted that buyer sentiment heading has fluctuated as a result of varying expectations around the timing of an interest rate cut next year.
“Some buyers are entering the market early, anticipating increased competition once rates are cut. Others are waiting for reduced interest rates to improve borrowing capacity and ease household budget pressures,” Tiller said.
Potential impact of the 2025 federal election
LJ Hooker stated that the 2025 federal election is expected to have a “minimal market impact” due to both major parties lacking “transformative housing policies”.
As a result of these conditions, the company highlighted that “housing supply remains constrained due to high construction costs, labour shortages and lengthy planning processes”.
To address these challenges in 2025, Tiller emphasised that “government action on housing supply by dramatically improving the feasibility of building new homes will be critical to addressing the longer-term supply imbalance”.
“We need our politicians to step up with direct funding for house projects, streamlined planning systems, reduced taxes and levies, and increased skilled construction worker immigration, especially for regional areas,” Tiller said.
Market conditions to vary in 2025
Price growth is expected to vary across the nation, being dependent on geography, property type and price point, and offering diverse opportunities for buyers and sellers in different markets.
LJ Hooker also observed that investors facing cash flow pressures from high interest rates have begun reducing their portfolios, with purchasers in Victoria being particularly impacted by new taxes and regulations.
However, the company noted that some investors have shifted their focus to high-growth regions in South Australia, Western Australia and south-east Queensland – a trend LJ Hooker expects to continue in the year ahead.
LJ Hooker highlighted that in 2025, key hotspots will include “affordable suburbs with new infrastructure, transport links and housing supply”, with Wattle Grove and Blacktown in Sydney, Springfield Lakes in Brisbane, and Hillcrest in Adelaide listed as prime examples.
Tiller shared his belief that the Australian property market is set for another highly active year, with strong capital gains over the past 12 to 18 months likely to attract owner-occupiers who are looking to downsize or capitalise on high sale prices.
“Sellers who act early may capture motivated buyers in the post-holiday period, while those waiting for rate cuts could benefit from increased competition and potential sales price growth,” Tiller said.
“Buyer demand remains solid, albeit concentrated in more affordable areas of the market, and this is true for investors, too,” he added.
You are not authorised to post comments.
Comments will undergo moderation before they get published.