Much like the rest of the world, the Australian property market has seen fluctuating conditions for a few years, and 2024 has been no exception. We’re a nation in transition, for sure. As we embark on the last quarter of the year and ahead to 2025, it’s essential to understand where we’ve been and where we’re heading, whether you’re a seasoned investor or brand new to property investing.
A year of stabilisation
After experiencing an explosive real estate market during the pandemic, where property prices skyrocketed thanks to government incentives and the shift towards a more flexible workplace, 2024 marked a period of steady growth. KPMG’s forecast has projected that house prices will continue to rise gradually over the next 18 months, driven by a combination of market recovery, increasing migration, and a return to relative economic normalcy.
“True to these predictions, we have seen a gradual climb in prices, especially in capital cities like Sydney and Melbourne,” stated Brad Wearne, General Manager of Meridian Australia. “Some areas are seeing an annual increase of 5-8%.”
The national median house price in 2024 increased to 4% compared to 2023, which, while slower than the post-pandemic boom, indicated a return to normal market conditions.
However, a notable trend in 2024 has been the growing popularity of regional markets that offer lifestyle benefits. Whilst not entirely new, this shift has been evident throughout 2024 and will continue into the future.
For first-time investors, 2024 has been a period of opportunity. With interest rates stabilising, buyers found themselves able to enter the market without the fierce competition previously seen in 2022 and early 2023.
Seasoned investors, however, including those with established portfolios, have been consolidating and securing long-term investments throughout 2024. “Many have been focusing on medium-density housing options in inner-city areas where demand remains robust,” says Brad.
A return to property investment fundamentals
According to Brad, to properly assess what 2025 may hold in terms of property investment, we need to consider how 2024 has compared to previous years. “In 2021 and 2022, we experienced an almost frenzied market,” he explains. “House prices surged by nearly 20% in some areas during the height of the pandemic. Whilst this boom created opportunities, it also introduced volatility in the market, especially for new investors who were eager but often priced out or overleveraged.”
2023 saw a cooling period for price growth rates. Interest rates rose, economic uncertainty loomed, and the frenzied demand slowed. For many, this was a reality check. Brad says that seasoned investors took stock of their portfolios during this period, while new investors were more cautious, taking their time to research and explore options. “By the time we entered 2024, the market had recalibrated,” Brad reflects. “There was less speculation and more focus on long-term growth and sustainability, particularly in urban centres like Brisbane and Perth, where property prices remained relatively affordable compared to Sydney and Melbourne.”
The trends that will shape 2025
Several key trends are emerging that investors should be aware of:
1. A continued focus on affordability
One of the strongest yet unsurprising trends moving forward will be affordability. House prices will continue to rise, particularly in capital cities, but the increase will be more measured compared to patterns seen during previous years. Brad suggests this will open up opportunities for first-time buyers and investors to enter the market at a relatively stable point. KPMG predicts a continued national price increase of 3-5%, allowing for growth without the fear of missing out. Key areas like the South-East Queensland corridor will likely attract continued interest due to their relative affordability.
Meridian's analysis has repeatedly shown this region’s resilience and growth potential, making it a hotspot for savvy investors. At the same time, a prolonged period of correction coupled with wage growth over the last three years has led to affordability gains in the Melbourne property market. These are positive signs that the pendulum may be beginning to swing, signalling the start of Melbourne’s next growth cycle.
2. Urban density and multi-use properties
With more employees returning to the office workspaces in hybrid work models, the demand for inner-city properties is expected to grow. “The difference is that the focus will be on medium-density, multi-use developments that provide the flexibility modern buyers are seeking,” Brad advises. “Investors should explore options in the 'missing middle' – not high-rise apartments, but not suburban sprawl either. Townhouses and boutique developments in gentrifying areas will likely be solid performers.”
3. Migration driving demand
Undoubtedly, higher migration rates will be a significant force driving demand in the property market. In 2024, we saw migration levels begin to rebound, which will only accelerate in 2025.
According to Meridian’s analysis, Sydney and Melbourne will remain the top destinations for new arrivals. It may be a case of “rising tides lift all ships”, with other states also experiencing above-average population growth.
“Under these circumstances, it’s important to exercise caution and understand the underlying supply/demand balance before investing”, Brad advises. “Markets that have been the strongest performers over the last three years may not necessarily possess the same fundamental drivers of price growth over the forecast period. Monitoring new dwelling commencements vs completions will play a key factor in this.”
2025 - A year of opportunity
There’s no doubt 2025 will bring a wealth of opportunity. The market will continue to grow but at a more measured pace, giving investors breathing space to make well-informed, long-term decisions.
The Australian property market is evolving. With the right strategy and a solid grasp of emerging trends, 2025 can be a great year in property investment. Whether you want to enter the market for the first time or expand your portfolio, our experienced team at Meridian Australia are ready to help guide you every step of the way.
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