While affordability pressures remain front and centre, the national outlook suggests that even modest interest rate cuts and strong underlying demand will keep upward pressure on prices through 2025.
In Sydney, the median house price is forecast to rise 7 per cent to $1.83 million, a jump of $112,000 — “more than the national average annual salary,” according to the report.
The increase reflects persistent supply constraints and strong buyer demand in Australia’s largest city.
Melbourne is expected to post a 6 per cent rise, bringing its median house price to $1.1 million, a new record and a full recovery from the city’s two-year downturn.
The report notes that Melbourne remains comparatively attractive for buyers, with prices still 63 per cent more affordable than Sydney.
Brisbane’s property market is forecast to grow by 5 per cent, pushing the median house price to $1.09 million.
While still rising, this marks a shift from the city’s recent double-digit growth, with Domain flagging signs of moderation.
Similarly, Adelaide is projected to increase 4 per cent to $1.05 million, continuing its record-setting run but at a steadier pace than previous years.
In Perth, prices are expected to grow 5 per cent, taking the median house price to $982,000.
The report highlights Perth’s strong fundamentals — including “strong population growth, relative affordability, and high income gains” — and predicts the city is “poised to join the million-dollar club by the end of 2026.”
Canberra’s market is also tipped for a 4 per cent increase, bringing the capital’s median house price to $1.10 million.
Despite the rise, Domain notes Canberra “remains the most affordable capital based on price-to-income ratios owing to modest population growth and a more balanced supply-demand dynamic.”
Domain’s Chief of Research and Economics, Dr Nicola Powell, said that while east coast markets were regaining pace, growth would vary by city and hinge on multiple local factors.
“East coast markets are regaining momentum, but growth will depend heavily on local factors like affordability and population changes,” she said.
She added that lower interest rates and government incentives would continue to support property prices, particularly in rate-sensitive markets like Sydney and Melbourne.
“Lower interest rates, cheaper borrowing, and targeted support for first-home buyers will keep prices rising, especially in Sydney and Melbourne, which are most sensitive to rate changes. The double-digit price growth we saw in Brisbane, Perth, and Adelaide are also forecast to soften,” Dr Powell said.
While more rate cuts are likely, Dr Powell warned that the next growth cycle would be more subdued.
“Even with more rate cuts on the horizon that will increase buyer capacity, the upswing in house prices is expected to be more modest than in previous rate-cutting cycles.
“This reflects forecasts of smaller, more gradual rate reductions and ongoing affordability challenges, with housing costs continuing to take up a significant portion of household income in most capital cities.”
The outlook comes as affordability remains a major concern. Despite the cooling of inflation and improving borrowing conditions, household budgets remain under pressure from rising rents, high living costs, and wage growth that has not kept pace with property values in many regions.
Dr Powell’s assessment underscores the complex balance ahead: rising buyer capacity on one hand, and long-term structural affordability constraints on the other.
It’s a combination that could see a return to moderate but sustained growth — not the sharp booms of previous cycles.
The report reinforces what many in the industry already see: the housing market may be cooling from its most intense moments, but the upward trend is far from over.
