In 2021, record-low interest rates combined with built-up household savings through the pandemic sparked one of the biggest property booms in Australian history. 

2022 was marked by the sudden, rapid rise of interest rates which put a serious dampener on consumer confidence and saw those historic price gains winding back somewhat. 

The new year ahead is also likely to be driven by the movement of interest rates, but the expectation is that the majority of the hikes are now over — and rate cuts will arrive in 2025. 

Interest rates have peaked in 2024 as expected, price falls have eased, with values stabilised as uncertainty reduces, 2025 is heading back into the up trend with property prices rising again.

There are also several key factors that she said would help to support property prices as 2025 unfolds. 

The downward pressure from rate rises will be countered to a degree by positive demand effects that stem from tight rental markets and rental price pressures, rebounding foreign migration, stronger wages growth, and over the long run, housing supply pressures. 

The rental crisis, which will only worsen as immigration returns, could have a significant impact on the market as investors are drawn back to the table. 

“If rents continue to outpace housing values, yields will continue to recover enticing investors back into action,” she said.

“Investor activity may begin to increase, likely underpinning the apartment market, particularly with the value units offer relative to other property types. Tight rental market conditions may also encourage others into home ownership and together with investor activity, strong rent growth has the potential to buffer price falls.”