The real estate sector in Australia is tipped to grow slowly in 2025 due to the supply of houses and affordability issues. In their latest report, Westpac economists project a 3% rise in prices across the country this year, with much more substantial gains anticipated in 2026 because of the reduction in the interest rates by the Reserve Bank of Australia.
Recent information indicates that the home prices just caught the wind in February whereas they had slid down during December and January periods. After the cut in interest rate by the RBA, the buyer’s mood has been uplifted, thereby enabling them to borrow more and also the consumer demand has been renewed.
Nonetheless, first-time homebuyers continue to grapple with problems of affordability in the wake of low-interest rates. There was a small fraction of the total new entrants who were first time kitchen users, the bulk of the increase in the first-time buyer market was due to demographic changes.
The supply of housing however remains very tight mostly because of construction delays and high costs. Although there will be an increase in approvals for the next two years, the competition will be difficult to catch up with the number of homes targeted by the federal and state government which aim to have 1.2 million new houses by 2029.
Regional-wise, Brisbane is foreseen to outshine other cities in the country by showing a double-digit increase in housing prices that will be driven by swift population growth and the limited number of houses available for sale.
Weakness is also expected to be observed in Sydney and Melbourne simply because of the planned higher number of constructions and the recent affordability issues.
