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Get Ready: Record High Home Prices Expected in FY25

The latest Domain FY25 Price Forecast Report gives a clear view of what’s ahead for the Australian property market, especially in Sydney and other major cities. If you’re thinking about entering the property market soon, understanding these predictions can help you make smarter decisions. In Sydney, home prices are expected to reach new highs by the end of the 2025 financial year.

The forecast suggests in Sydney, house prices will rise by 6-8%, exceeding a median price of $1.7 million. Unit prices are also set to increase by 4-6%. These price rises come amidst challenges like affordability issues and high interest rates worsened by the current cost-of-living situation. The Reserve Bank of Australia's decision to keep the cash rate at a decade-high of 4.35% since late last year has added to these financial pressures.

One of the main reasons behind the rising property prices is the shortage of new homes. Issues like scarce land, slow building approvals, and expensive construction costs have limited new developments. Additionally, a growing population due to strong migration is driving up demand, leading to a situation where there are more buyers than homes available.

This trend isn’t just happening in Sydney—it’s expected to affect most capital cities across Australia. Factors like population growth, challenges in construction, and easier access to loans are expected to drive up prices nationwide. However, it’s important to note that different cities will see different levels of price increases.

Demand for housing is also rising due to changes in housing preferences and demographics. More people are living alone or in smaller households on average, which increases the need for homes. This demographic shift, along with migration patterns, is further increasing demand for housing.

To sum up, whether you’re looking to buy or sell, understanding the current state of the property market is crucial. The forecast for record-high home prices in Sydney and other major cities points to a strong market driven by high demand and limited availability of homes. Staying informed will be key to navigating the opportunities and challenges in the property market in FY25.

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