Rumours of the death of ‘the national property boom’ are greatly exaggerated – especially since we didn’t have a national property boom in 2024. Rather, over the past 12 months, we have seen differing market cycles in many locations - as is the usual state of play in real estate throughout Australia. Strong property price growth was recorded in Perth, Adelaide, and Brisbane in 2024, but not in Melbourne, Sydney, Canberra, Darwin or Hobart. 

 

Similarly, in the regional areas, there were declining and stagnating markets, as well as some where prices were showing good price growth.

 

This is situation normal in Australian real estate. It’s a big country and real estate markets are very local in nature.

 

So, a national property boom? We haven’t had one. So you ignore headlines declaring that the national property boom is over.

 

So, what can we expect in residential real estate in 2025? Firstly, the major bank economists will predict price declines in 2025 – as they did at the start of 2023 and again at the start of 2024 - and will be proven wrong yet again because it they fail to understand the basic dynamics that drive prices in residential real estate. Politicians will continue to scapegoat their traditional targets of foreigners (migrants, international students and foreign investors) as well as mum-and-dad Australian investors – and enlist the help of shallow journalists to infer that these cohorts are the cause of all the problems in the housing markets.

 

The reality is that investors, local and foreign, are not the problem – they are the solution. They hold the keys to solving the housing crisis.

 

Meanwhile, most State Governments will continue to make the housing crisis worse with anti-investor policies - with the negative ramifications of recent rental reforms to become more apparent as 2025 unfolds. Vacancy rates will remain low, but the rate of rental growth generally will slow because markets have hit a ceiling due to limits in the capacity of tenants to pay more.

 

However, restrictive rental legislation by various state and territory governments will continue to motivate some investors to sell up – thereby making the rental shortage worse. The Greens will continue to embarrass themselves and lose voter support with anti-investor rants, with the Federal Election due early in the year likely to see their influence reduce even more.

 

Investors will continue to pile into the frenzied markets, mostly in regional Queensland -however, the smart money will target locations early in the growth cycle, not at the end. Evidence that the Perth market has passed its peak will become more apparent with a similar slowdown forecast for regional WA. The solid economic and market fundamentals in Adelaide means it will continue to show solid growth next year as well as Brisbane and regional Queensland.

 

Melbourne did not have a good year in 2023 or in 2024, but I believe it will start to rise next year, thanks to the price differential with Sydney and its high population growth. This will occur despite Melbourne having the worst state government and the highest taxes in the nation. Darwin will be targeted by investors and will begin to show some price growth next year, too. More and more indicators are favourable for the Northern Territory capital, with investors seeking its affordable houses and high rental yields. The Exodus to Affordable Lifestyle will continue, boosting many regional markets, as more big city residents seek a different and more affordable way of living, enabled by technology and the ability to work remotely. What we have termed the ‘second-wind markets’ will ignite.

 

These are locations where the market sprinted (with major price growth) from 2022 to 2024, has been catching it breath since then, and now, having got its second wind, is starting to run again.

 

They include regional cities such as Albury-Wodonga and Tamworth in NSW, the Sunshine Coast and Hervey Bay in Queensland, Bendigo and Ballarat in Victoria, as well as Launceston and Burnie in Tasmania.

There will continue to be a lot of conjecture about interest rates next year, but the potential impact of any rate reductions will be largely irrelevant and greatly over-rated by many economists and news media.

 

As we’ve learned from the past two years, trends with interest rates are not the major influence on real estate outcomes.

 

If they were, prices would have fallen everywhere over the past two years.

 

And that, clearly, has not been the case.