The newest Property Outlook Report has forecast changes across Australia’s property market as 2025 brings new opportunities and challenges for property owners, driven by changing market dynamics and emerging regional hotspots.
According to the report’s co-author, Ray White chief economist Nerida Conisbee, Australian and global economic conditions will play a role in the upcoming Reserve Bank of Australia (RBA) interest rate cuts.
“While rate cuts are likely in 2025, their timing and size will depend on how inflation behaves, what happens in the global economy (especially in the US), and how well the Australian economy holds up through the year,” Conisbee said.
While she expects the RBA to cut interest rates twice in the second half of the year, it will depend on how inflation and the economy play out.
“The most important is inflation. While it’s now back within the RBA’s target range, there are risks it could rise again,” Cornisbee said.
She said that while Australians are in dire need of cost-of-living relief and have been waiting for lower interest rates, the RBA wants to be sure that cutting rates won’t cause inflation to rise again.
“They’ll need to balance helping struggling households against keeping inflation under control.”
“The RBA will probably stick to its careful approach; this means making small, well-spaced cuts rather than rushing to lower rates quickly,” Cornisbee said.
She pointed out that the recent US elections, which saw Donald Trump return to the White House, will have a major role in the global economy depending on whether Trump decides to increase his government spending and put higher taxes on Chinese products.
“This could push up prices worldwide, including in Australia, making it harder for the RBA to cut rates.”
The report showed that the RBA interest rates have also impacted property markets across the country, especially in more expensive cities like Sydney and Melbourne.
Year 2024 has shown that Sydney and Melbourne’s markets have slowed, with prices nearly flat, as buyers in these cities are more sensitive to interest rate changes due to their larger average mortgage sizes.
“When rates do start to fall, this could encourage more buyers back into the market and increase borrowing capacity,” Conisbee said.
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Despite a modest price dip in 2024, Conisbee noted that prices are unlikely to fall significantly in 2025 due to strong population growth driving housing demand and rising construction costs.
While Conisbee said that most housing markets across the country are showing signs of cooling down, Perth, South-East Queensland and Adelaide continue to show strength.
“Cities with stronger economic conditions like Perth could continue to see some growth, though likely at a slower pace than in 2024,” she said.
2. Queensland continues its growth
The 2025 Property Outlook Report also noted the emergence of a “Golden Arc” stretching from the Gold Coast to Brisbane to the Sunshine Coast, which will continue its growth in 2025.
Ray White senior data analyst, Atom Go Tian, said Queensland’s coastal markets have had “remarkable growth” in 2024 and are now right behind Sydney.
The report showed that Gold Coast and Sunshine Coast have become Australia’s second and third most expensive housing markets, with both regions experiencing a 76 per cent growth over the past five years and a geometric mean house price of $1.18 million and $1.14 million, respectively.
“The Golden Arc is likely to emerge with Brisbane joining the Gold Coast and Sunshine Coast as premium markets,” Tian said.
Compared to Queensland, Tian said that Melbourne’s market has seen a significant dip, now sitting fourth nationwide with a geometric mean house price of $1.02 million.
“Over the past five years, Melbourne’s price growth has been the slowest among major cities, at just 20.6 per cent. Given these trends, it seems unlikely that Melbourne will return to the top three markets anytime soon,” he said.
Tian noted that Melbourne’s decrease has the potential for a “mid-market” cluster, with Perth and Adelaide foreshadowing a takeover of Melbourne in price.
The report also showed the growth of regional Queensland, with the Gold Coast and Sunshine Coast collectively accounting for $14- out of $20-million areas.
3. Commercial properties
According to Ray White Group’s head of research Vanessa Rader, the 2025 commercial property market will see a surge in retail opportunities while the secondary office market struggles.
“Retail property is positioning itself as the standout performer for 2025, marking a significant shift from recent years where industrial assets dominated commercial property markets,” Rader said.
The Property Outlook report data showed retail assets have already increased their returns for the past two consecutive quarters, with a 2.8 per cent total gain. Additionally, the high volume of retail transactions from 28 per cent to 41.1 per cent in late 2024 showed this rebound.
“Despite ongoing discussion about the threat of online retail, physical stores have shown remarkable resilience. Online spending accounts for just 11.4 per cent of total retail transactions and has remained relatively stable over recent years,” Rader said.
Rader said that several factors contribute to a positive outlook for retail, including strong population growth and limited new supply, which have improved occupancy and rental performance in key markets.
“Additionally, the retail landscape is shifting, with entertainment becoming a central element of successful centres, turning them into lifestyle destinations rather than just shopping hubs,” she said.
In comparison, the report announced the “death” of the secondary office market driven by tenant demands and intensifying ESG pressures, which will challenge lower-quality offices.
“Corporate Australia’s focus on workplace experience and sustainability credentials has transformed from a ‘nice-to-have’ into a non-negotiable requirement.
“This flight from secondary stock has seen vacancy rates in B, C and D-grade assets push beyond 20 per cent in several submarkets, while prime-grade vacancies are slowly improving,” Rader said.
The report forecasted that the gap between prime and secondary assets will continue to widen as the market favours premium properties, with premium assets attracting blue-chip tenants while secondary assets face declining rents and fewer tenants.
“The secondary office sector faces a turning point; buildings unable to meet rising environmental standards and tenant expectations risk becoming stranded assets,” Rader said.
“The market is likely to see an increase in opportunistic investors targeting these assets for conversion or redevelopment, particularly in locations where alternative uses can unlock greater value.”
Additionally, Rader said interest rate cuts will positively affect the whole commercial sector, with private investors driving the change.
“The expected easing of monetary policy should create a more favourable environment for leveraged buyers, potentially driving increased competition for quality assets as debt costs moderate,” she said.
