Property market set for high activity in 2025

One of Australia’s largest real estate chains has outlined the forces it believes will shape Australia’s residential property market for both owner-occupiers and investors in the year ahead.

LJ Hooker has also identified areas in each state and territory that it believes will see high sales activity in 2025, with vendors aiming to capitalise on recent price growth.

The outlook

LJ Hooker says Australian residential property has undergone “a prolonged period of attractive gains and high yields.”

Even though 2024 was characterised by elevated interest rates and global uncertainty, it points out that CoreLogic described the year as one in which “the Australian housing market demonstrated remarkable resilience.”

The real estate chain says an “above-average number of listings is set to keep property sales active in 2025”, but the performance of the property market will be dependent on when the Reserve Bank of Australia decides to lower interest rates.

The central bank has held the cash rate at a 13-year high of 4.35% since November 2023.

LJ Hooker’s Head of Research, Mathew Tiller, says the ‘higher for longer’ interest rate environment is putting pressure on household budgets and mortgage holders.

However, he doesn’t believe the RBA will move to lower the cash rate before May, “due to persistent inflation, robust employment markets and global economic uncertainty.

“Interest rates will heavily influence market performance in 2025, and the impact will be dependent on the timing and the depth of the cut,” Mr Tiller says.

“An earlier announcement (of a rate cut) and a significant reduction will likely strengthen the market, while prolonged rate stability at elevated levels may soften conditions.”

2025 will also see a Federal election - due to be held by the end of May - but the LJ Hooker Group’s view is that this will have a minimal impact on the property market, “with both major parties lacking transformative housing policies.” 

“Housing supply remains constrained due to high construction costs, labour shortages and lengthy planning processes,” the real estate chain says, factors that tend to put a “floor” under property prices.

Buyers and investors

LJ Hooker believes that, in 2025, vendors are likely to look to take advantage of recent price growth.

On the other side of the equation, “buyer demand should remain consistent, driven by strong population growth, rising wages, tight rental demands and a shortage of newly constructed houses.”

Listings were 10% above average during the 2024 spring selling season and LJ Hooker says its agents are expecting a busy 2025.

The real estate chain believes there will be two groups of vendors in 2025: “those listing early to capture post-holiday demand, and those waiting for rate cuts to boost buyer activity and sales price.

“Likewise, we will also have two groups of buyers,” LJ Hooker’s Head of Research, Matthew Tiller, says.

“Some will be looking at entering the market early, anticipating increased competition once rates are cut.

“Others are waiting for reduced interest rates to improve borrowing capacity and ease household budget pressures.”

LJ Hooker says that recently “investors have been de-leveraging portfolios under cashflow pressure from high interest rates, with those who have purchased in Victoria particularly impacted by new taxes and regulations.

“Some investors, however, have diverted their attention to high-growth regions in South Australia, Western Australia and southeast Queensland – a trend expected to continue in the year ahead.”

2025 “Hotspots”

Unlike many other property forecasters, LJ Hooker uses the word “hotspot” to denote a region where it believes there will be plenty of market activity in the coming year, not necessarily a suburb primed for above-average price growth.

These could include areas where there’s an above-average number of listings, meaning price growth could be constrained, as there is not intense competition for a limited number of properties.

Nevertheless, their predictions can be a useful guide for potential buyers and investors to hone in on areas where a higher number of properties for sale could enable savvy buyers to negotiate lower prices.

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In New South Wales, LJ Hooker believes “investors and owner-occupiers upgrading to larger homes will dominate, to take advantage of high listings and slower price growth.”

The company says first-home buyers will be particularly active in Sydney’s outer suburbs.

It lists exclusive Mosman and Freshwater on the Northern Beaches as expensive hotspots, while Blacktown in western Sydney and Wattle Grove in the south-west will also see plenty of activity.

In regional New South Wales, it lists the rapidly gentrifying town of Orange - west of Sydney - and Warrawong, an outer suburb of Wollongong.

Despite an exodus of investors from Victoria, LJ Hooker says “improving rental yields and growing affordability are set to draw interest from investors and first-home buyers” to the southern state.

It lists affordable Werribee and Frankston in Melbourne’s outer suburbs as hotspots, along with the regional cities of Geelong and Ballarat.

LJ Hooker is bullish about Queensland in 2025, saying that “infrastructure projects ahead of the 2032 Olympics continue to attract investors and interstate migrants, which will see price growth remain above average.”

Inner-city Coorparoo and Springfield Lakes in Brisbane’s outer south-west are earmarked as hotspots, as are the regional centres of Toowoomba and Nambour.

South Australian property has seen strong price growth in recent years, with LJ Hooker saying that “owner-occupiers, investors and retirees are drawn to Adelaide’s affordability and lifestyle.”

While that trend will continue in 2025, the real estate chain says it expects price growth to moderate as the number of listings for sale increases.

It predicts Hillcrest in Adelaide’s north-east, and beachside Seacliff will be city hotspots for property activity, along with Australia’s self-declared “seafood capital”, the regional centre of Port Lincoln.

While several data analytics firms like CoreLogic and PropTrack predict a slowdown in the astonishing price and value growth seen in booming Western Australia over the past two years, LJ Hooker believes “ongoing strong rental yields will continue to attract investors.

“There is an undersupply of new homes and listings, although solid economic activity will see price growth remain strong.”

The real estate chain predicts Innaloo in Perth’s inner north will be a hotspot for property activity, as will the regional centres of Busselton and Geraldton.

Although Tasmania has seen some easing in prices lately, LJ Hooker believes the property “market will hold steady in 2025 and will see an uplift in activity once interest rates fall.”

It sees continuing “demand from retirees and lifestyle buyers seeking affordability in regional and coastal areas.”

It’s forecasting plenty of activity in Kingston in Hobart’s south, while the large centres of Devonport and Launceston in northern Tasmania will be regional standouts.

LJ Hooker says the Northern Territory attracts “investors and first-home buyers…drawn by low entry prices.” 

It forecasts “solid levels of investment in energy, mining and defence moving into the NT over the coming years. 

“This will in turn see a more active property market as population and employment levels rise.”

It lists Parap near Darwin City and the outer suburb of Zuccoli as potential hotspots, while Braitling, an outer suburb of Alice Springs, gets the nod in Regional NT.

Finally, LJ Hooker says “post-election confidence and potential rate cuts may bring investors back” to the ACT market.

It forecasts particularly strong activity in Canberra’s outer suburbs of Kambah, Wright and Amaroo.