House price forecast: What’s driving some areas to reach record highs?

While the growth of house prices across the country is expected to be slower than it was in 2023 and 2024, properties across Perth, Adelaide, Sydney, and Brisbane are expected to reach record highs in the coming financial year.

As discussed in Domain’s Forecast Report Financial Year 2025, prices are predicted to grow 3 percentage points for houses and 2 percentage points for units across Australia.

In fact, there isn’t a single area recognised as dropping in price, with all major cities witnessing an increase.

House prices in Sydney, Melbourne, Brisbane, Perth, and Adelaide are expected to climb by 2 percentage points in the coming financial year. Canberra is predicted to increase by 4 percentage points and the Gold Coast and Sunshine Coast by 3 percentage points each.

Regional areas aren’t exempt from these predictions either, with Domain forecasting house prices in regional NSW and Victoria to jump 3 percentage points and regional Queensland by 2 percentage points.

If these predictions come to fruition, Sydney, Brisbane, Adelaide, and Perth “will be at a new record high,” said Domain.

In Sydney, for example, this will put the median house price between $1.73 million and $1.76 million. Meanwhile, Brisbane will be between $980,000 and $998,500; Adelaide between $965,000 and $984,000; and Perth between $840,000 and $856,000.

Melbourne on the other hand is expected to remain “relatively stable” over the coming financial year, with median house prices between $1.03 million and $1.05 million.

Canberra is also expected to be better off than other states, with prices “set to move into the early stages of recovery,” and prices between $1.05 million and $1.09 million.

But what’s driving these trends? There are a variety of factors at play, said Domain, with the most notable being:

• Population: Demand has escalated in line with housing composition changes, demographic shifts, and strong population growth.
• Construction headwinds: Limited supply will be a dominating factor positively influencing home prices.
• Borrowing power: A double win for greater borrowing power could provide further momentum to Australia’s housing market.

Conversely, there are a few themes pushing prices down. The most significant are:

• Income stagnation: A decline in real incomes will worsen affordability.
• Rising unemployment: A significant rise could pose a risk.
• A gloomy consumer: Any further decline in consumer sentiment could weigh on housing turnover.

[RELATED: Brisbane, Perth, and Adelaide to continue outperforming other states]