Terry Ryder: ‘This is what will happen in the 2025 property market’

Over the past 12 months, we have seen differing market cycles in many locations – as is the usual state of play in real estate throughout Australia.

Strong property price growth was recorded in Perth, Adelaide, and Brisbane in 2024, but not in Melbourne, Sydney, Canberra, Darwin or Hobart.

It was a similar story in regional areas. This is “situation normal” in Australian real estate. It’s a big country and real estate markets are very local in nature.

What I think will happen in 2025 is:

• Most state governments will continue to make the housing crisis worse with anti-investor policies – with the negative ramifications of recent rental reforms to become more apparent as 2025 unfolds.

• Vacancy rates will remain low, but the rate of rental growth generally will slow because markets have hit a ceiling due to limits in the capacity of tenants to pay more. However, restrictive rental legislation by various governments will continue to motivate some investors to sell up – thereby making the rental shortage worse.

• Investors will continue to buy in the frenzied markets, mostly in regional Queensland, however, the smart money will target locations early in the growth cycle, not at the end.

• Evidence that the Perth market has passed its peak will become more apparent with a similar slowdown forecast for regional Western Australia.

• The solid economic and market fundamentals in Adelaide mean it will continue to show solid growth next year as well as Brisbane and regional Queensland.

• Melbourne did not have a good year in 2024, but I believe it will start to rise again in 2025, thanks to the price differential with Sydney and its high population growth. This will occur despite Melbourne having the worst state government and the highest taxes in the nation.

• Darwin will be targeted by investors and will begin to show some price growth next year, too. More and more indicators are favourable for the Northern Territory capital, with investors seeking its affordable houses and high rental yields.

• The exodus to affordable lifestyle will continue, boosting many regional markets, as more big city residents seek a different and more affordable way of living, enabled by technology and the ability to work remotely.

• Second-wind markets will ignite. These are locations where the market sprinted (with major price growth) from 2022 to 2024, but have been catching breath since then, and now, having got a second wind, are starting to run again. This includes regional cities such as Albury–Wodonga and Tamworth, the Sunshine Coast and Hervey Bay in Queensland, Bendigo and Ballarat in Victoria, as well as Launceston and Burnie in Tasmania.

Undoubtedly, we’ll also continue to hear a lot of speculation about what is happening with interest rates in 2025 – as we do most years.

My advice is to ignore it. The potential impact of any rate reductions will be largely irrelevant and greatly overrated by many economists and news media.

As we’ve learned from the past two years, trends with interest rates are not the major influence on real estate outcomes.

If they were, prices would have fallen everywhere over the past two years.

And that, clearly, has not been the case.