2025 property forecast in the ACT good news for home owners

2024 was the year Australia’s property market showed adaptability and strength amid ongoing cost-of-living pressures and a cash rate that remained high.

The ongoing challenges of chronic undersupply, strong population growth and high construction costs helped sustain the market.

According to the Domain End-of-year Wrap Report, national property prices continued to climb, including two quarters of growth in Canberra in the first half of the year, encouraging more sellers to come out in late winter and set the local market up for a strong spring. 

“This imbalance of supply and demand pushed the number of homes for sale to roughly a four-year high nationally,” said Dr Nicola Powell, Domain chief of research and economics. 

$1,095,000 +

83 Sternberg Crescent, Wanniassa ACT 2903

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“The upside for buyers was easing price growth, softer clearance rates and longer days on market for sellers. Negotiations on price have become more frequent, signalling a shift in the balance of power between buyers and sellers.”

Despite this, 2025 is expected to bring a rate-cutting cycle that will make borrowing more affordable, boosting buyer activity and potentially driving up prices once again.

“If APRA reduces the mortgage serviceability buffer from 3 per cent, borrowing capacity will increase further. Together, these changes could accelerate access to the property market, increase demand, and exert upward pressure on housing prices,” Powell said.

According to the report, house prices in Canberra are expected to rise between 3 and 5 per cent in 2025, behind Sydney, Brisbane, Adelaide and Perth. Melbourne is anticipated to experience a similar reverberance in property prices, after three consecutive quarters of decline over the past year. 

The story is not as promising for owners of units in the ACT. After recording its fourth quarterly decline, marking the longest stretch of consecutive falls on record and the sharpest drop since December 2022, unit prices are forecast to continue declining between -4 and -2 per cent in 2025. 

$480,000 - $510,000

5/4 Verdon Street, O'Connor ACT 2602

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However, urban housing is evolving to address affordability concerns – a trend that the report claims will become more apparent in 2025. 

“Expect an increase in townhouses and smaller apartment buildings, particularly in middle-ring suburbs, as planning regulations promote diverse options for downsizers and young families,” Powell said.

“With stretched affordability and limited borrowing power, buyers’ ability to secure a home is capped. 

“However, 2025 could see pivotal changes that reshape this dynamic. An interest rate cut or targeted stimulus measures could trigger a wave of demand and spark price growth as the housing market responds to this newfound momentum. 

“It may take one or two rate cuts to motivate buyers into action, and the timing of these cuts will shape market dynamics in 2025, perhaps creating a year of two halves, with a weaker first half and a stronger second.”