House prices in 2024 have been slightly weaker than 2023, influenced by the ongoing cost-of-living crisis, high interest rates, and housing affordability issues.
National house price growth is expected to be modest in 2025, at a slightly lower level than in 2024. KPMG forecasts national house and unit prices to continue to rise by 3.3% for houses and 4.6% for units in 2025.
Key insights into Australia's residential property market
National house prices increased by 5.1% in 2024. However, the market is slowing down. National growth in the December quarter 2024 was flat, marking the weakest quarterly outcome since March 2023.
Rental price growth has moderated from a peak of 7.8% in March 2024 to 6.7% in September. Despite this slowdown, the continued strong growth in rental prices indicates that vacancy rates remain low, and the rental market is still tight.
Buyers have been cautious throughout 2024 because of uncertainty surrounding possible movement in the cash rate. There are three potential scenarios: the rate could increase, remain unchanged, or decrease.
Although rate cuts are eagerly anticipated, they are not expected until Q2 2025. When they do occur, these cuts are likely to boost homebuyer confidence in the second half of 2025 and continue into 2026.
The resilient labour market also contributes to overall stability in the housing market. It has helped mitigate the impact of the so-called ‘mortgage cliff’. Though there has been a slight increase in mortgage distress and arrears, the average level remains low.
Why KPMG
KPMG’s team of expert economists analyse the residential property market, providing historic and forecast figures regarding dwelling prices by property type and market.
KPMG can help your business navigate the current economic environment and plan for any future developments – please get in touch.
Related economic insights
Learn more about economic issues impacting the residential property market in Australia.
