2025 property market predictions

In recent years, Australia’s property market has boomed due to record-low interest rates, strong population growth, and a persistent housing supply shortage. Government incentives further fuelled demand, while foreign investment and the Brisbane 2032 Olympic and Paralympic Games announcement have contributed to plans for large-scale developments across the residential and infrastructure sectors.

However, the question on everyone’s mind is – what lies ahead in 2025?

Here are our top four predictions for the year.

1. Interest rates are moving down

The decision by the Reserve Bank of Australia (RBA) to cut the cash rate by 25 basis points in February brings positive news for buyers and mortgage holders, providing some relief after it remained at 4.35% for over 12 months.

In further good news, inflation is expected to decline to the target range of 2–3% in 2025 and to reach the midpoint by 2026. However, it remains uncertain whether interest rates will continue to decline or remain relatively unchanged before the federal election.

2. House prices will continue to rise

After years of significant growth, house prices are expected to keep increasing, albeit at a slower pace. A recent KPMG report forecasts a 5.6% rise in both Australian house and unit prices.

This upward trend is likely to be driven by factors such as limited housing supply, population growth, and potential further interest rate reductions by the RBA.

It is also worth noting that government policies related to housing affordability, investor activity, and foreign investment could influence the market’s direction.

3. Greater Brisbane will continue to be a standout performer

It’s no secret that Greater Brisbane has experienced stellar growth in the property sector, and in 2025, we expect the region to stand out among other capital cities. Like the rest of the country, factors such as population growth, migration, and infrastructure development have contributed to the sector’s strong performance. However, the region’s robust job market, lifestyle appeal, and the upcoming 2032 Brisbane Olympics have further enhanced the city’s attractiveness, driving future demand for housing.

There’s also positive news for the southern property markets – particularly Melbourne – with forecasts from KPMG suggesting a 6.5% increase in both house and apartment values in 2025.

4. Build-to-rent and land lease projects will increase in popularity

The Great Australian Dream is evolving. For younger Australians, factors such as the rising cost of living and property prices have made homeownership less accessible, prompting a shift in focus towards financial freedom, flexibility, and lifestyle choices, such as the ability to travel or move regularly.

Many developers have been quick to adapt to this changing demand, opting to deliver build-to-rent projects that offer similar luxury amenities to build-to-sell developments, such as gyms, wellness areas, premium communal spaces, and co-working facilities.

Similarly, land lease projects are expected to grow in popularity, targeting Australia’s ageing demographic. With relative affordability, lower upfront costs, and predictable living expenses, developers will continue to offer retirees an opportunity to maintain homeownership while enjoying resort-style facilities, flexible living arrangements, and a vibrant social environment.

At CDL, our current portfolio includes both build-to-sell and build-to-rent projects, along with a 5-star retirement village project. Find out more here: https://cdlaustralia.com.au/projects/