Buyers trying to crack into the housing market next year may get the chance to purchase before the next big jump in prices.

A new forecast has revealed that slowing home-price growth next year could create a window of opportunity for buyers to get into the market before anticipated rate cuts stimulate more housing demand.

Buyers with the means to purchase will be able to take advantage of an ongoing slowdown in the market next year, with the runaway price growth seen across much of the country over the past year finally easing.

Home prices are forecast to rise by between 1% and 4% at the national level, according to the PropTrack Property Market Outlook, released today.

That modest growth is slower than the 5.5% growth recorded so far this year, with the high number of homes on the market and affordability constraints keeping prices in check.

Perth and Adelaide are predicted to be the strongest performing capitals once again in 2025, although growth rates are tipped to be much slower. Picture: Getty

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Report author and PropTrack director of economic research Cameron Kusher said a number of factors would drive the slowdown, including the high interest rate environment and the upcoming federal election.

“With the rate of price growth slowing and interest rates expected to remain higher for longer, along with more properties coming to market for sale, it appears 2025 is set for weaker price growth than over recent years,” Mr Kusher said.

He said the increased number of homes still on the market after an unusually busy spring selling season could also make things easier for buyers.

Buyers in many capitals are spoiled for choice, with the number of homes for sale in Sydney, Melbourne and Canberra higher than at any point in the past decade. Picture: Jeremy Piper

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“Most capital cities have been seeing new listing volumes trending higher throughout 2024 as vendor willingness to put properties up for sale has increased,” he said.

“Sydney and Melbourne are currently seeing total listing volumes at highs not seen in more than a decade.”

“Assuming the higher volume of stock for sale persists, buyers will be afforded more choice when looking to purchase, likely reducing competition and urgency from buyers.

“In turn, this is likely to reduce upward pressure on prices.”

How home prices are forecast to change around Australia

Source: PropTrack Property Market Outlook December 2024

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While property prices aren’t anticipated to fall next year, the double-digit price growth seen in some of the smaller capitals is likely to be over, according to the report.

In Perth, where prices have gone up by a whopping 18.7% this year, a much more modest 3-6% uplift is anticipated – the highest forecast growth rate of all the capitals. 

That same rate of price growth is expected in Adelaide after a 14.6% jump this year, while Brisbane prices are tipped to rise 2-5%, compared with a 12.6% rise in 2024 so far.

Home price growth in Brisbane next year is expected to be slower than in 2024. Picture: Getty

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Sydney prices are forecast to rise by 1-4%, while Darwin, Canberra and Hobart are anticipated to record a 0-3% increase.

Prices will stay relatively flat in Melbourne, according to the forecast, landing somewhere between a 1% decrease and a 2% increase over the year.

Rate cut delay dampens demand

Mr Kusher said a key factor in the limited price growth anticipated next year is the outlook for interest-rate cuts, which kept getting pushed further and further back throughout 2024.

“Rate cut expectations are likely to shift over time, but it looks likely that interest rate cuts will occur later than expected with fewer overall cuts,” he said.

The RBA kept the cash rates on hold at 4.35% at its December board meeting, with most of the big banks now expecting the first rate cut to come in May next year.

RBA governor Michele Bullock said the board's next decision in February would depend on the results of upcoming releases of monthly and quarterly inflation data, as well as labour market and consumption data. Picture: Nikki Short

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Westpac chief economist and former RBA assistant governor Luci Ellis said the rate cutting cycle was expected to start mid year with back-to-back cuts in May and July, but there was a slight possibility of an early commencement.

“Even though we think the most likely scenario is that the RBA waits until May to start cutting rates, we think a February or April start date isn’t entirely out of the question,” she said.

ANZ and NAB are both tipping a cut in May, while Commonwealth Bank is sticking with its forecast for a February cut.

Mr Kusher said housing demand – measured by enquiry per property listing on realestate.com.au – had eased through 2024, but the data suggested buyers weren’t putting off buying altogether.

“Interestingly, the total volume of engagement, such as listing saves, shares, photo views and property views on realestate.com.au, is higher than a year ago, which may indicate a lot of people still interested in purchasing but taking longer to make a purchase decision.”

PropTrack director of economic research, Cameron Kusher. Picture: Supplied

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Mr Kusher said the upcoming federal election, anticipated before the end of May, could further keep a lid on price growth early next year.

“Housing activity typically slows in the lead-up [to an election]. So, this could contribute to a slower than normal housing market early in 2025.”

However, demand is only expected to be contained for so long, with rate cuts potentially providing a catalyst for price growth.

“We expect demand will continue to ease initially in 2025 however, once interest rates start to fall and borrowing capacities increase, we anticipate a lift in demand.”

Most homeowners are sitting on substantial equity gains since the pandemic, which could support home price growth in 2025, according to the latest PropTrack Property Market Outlook. Picture: Getty

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Another factor supporting price growth was the equity that many homeowners have built up in their properties as a result of the huge price increases recorded in most markets over the past few years, Mr Kusher said.

“Over the five years to October 2024, national dwelling prices have increased by 47.9%, however, there are substantial geographic variations in this data. “

“Among the capital cities Adelaide (+80.9%), Brisbane (+80.7%) and Perth (+79.1%) have seen the strongest price growth, while Melbourne (+17.1%), Darwin (+29.8%) and Canberra (+38.2%) have seen the smallest increases.”