Property Edge
Five Watershed Events for Property Lovers to Watch in 2025
The property landscape in Australia is increasingly fragmented, with market conditions diverging between regions. A range of major factors is set to influence the direction of the real estate market in 2025.
Factor 1: Federal Election
This year, Australians will head to the polls for a federal election. While elections are not inherently disruptive to property markets, they often create a sense of uncertainty that causes buyers and sellers to delay decisions.
The election’s potential impact lies in the competing policies of the Coalition and the ALP. The Coalition’s proposal to allow superannuation withdrawals for home deposits could push prices higher by increasing demand. Meanwhile, the ALP’s focus on social housing construction is a long-term approach aimed at easing affordability pressures.
For property investors, the election could create short-term volatility in sentiment, so it will be important to monitor the outcomes closely.
Factor 2: Global Economic Uncertainty
Australia’s property market is deeply influenced by the global economy. In recent decades, the country has thrived as an open trading economy, benefiting from booms in Asian markets like China and Japan.
However, 2025 presents new uncertainties. China remains a major buyer of Australian minerals, supporting the government’s budget, but structural challenges in its economy could dampen future growth.
At the same time, geopolitical tensions, such as those involving the US and China, could impact global trade and economic confidence. Investors should watch how these factors influence the Australian dollar, interest rates, and overall economic stability.
Factor 3: Supply of Properties for Sale
In 2024, property supply dynamics varied significantly across Australia. Cities like Brisbane, Adelaide, and Perth experienced tight supply, with listing volumes 30% below historical averages. In contrast, markets like Melbourne and Hobart had a surplus of properties for sale.
As spring approached, supply began to increase in previously tight markets, causing price growth to moderate. This pattern underlines the importance of monitoring listing volumes as a key indicator of market health.
In 2025, investors should keep an eye on southeast Queensland for increased supply and on Victoria and NSW for potential decreases.
Factor 4: Construction Activity
Australia’s construction sector faced significant challenges in 2024, with falling housing starts despite government targets to increase supply.
Encouragingly, residential building approvals rose by 3.2% in November 2024, driven by strong growth in Queensland and Western Australia. Detached houses led the way, while multi-unit approvals increased significantly in NSW and Victoria.
For investors, steady growth in construction activity signals improving market conditions. However, it’s important to note that construction cycles often lag the broader market, and sudden increases in activity can lead to subsequent slowdowns.
Factor 5: Interest Rates
Interest rates remain the most influential factor in shaping the property market’s direction. Analysts predict two rate cuts in 2025, with a 74% chance of the first cut occurring in February.
Falling interest rates historically drive property price growth by reducing borrowing costs and increasing buyer demand. If these predictions materialise, houses at and above the median price in Brisbane, the Gold Coast, and Melbourne are likely to see the greatest benefit, with Sydney’s impact concentrated around the median price point.
Investors should prepare for potential opportunities that arise as rates fall and confidence returns to the market.
Conclusion
In a year of transition, the Australian property market will be shaped by a combination of political, economic, and structural factors. From federal elections to interest rates, investors who stay informed and adapt to these changes will be best positioned to seize opportunities in 2025.
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