PROPERTY OUTLOOK REPORT
RAY WHITE AND LOAN MARKET
INTRODUCTION
DAN WHITE MANAGING DIRECTOR
RAY WHITE GROUP
As we head into 2025, the Australian property market continues to evolve. From shifting market dynamics to emerging regional hotspots, this year presents both exciting opportunities and complex challenges for property owners, investors, and industry participants alike.
In this comprehensive report, our team of experts at Ray White, working alongside our colleagues at Loan Market, brings you detailed insights into the trends that will shape the property landscape in 2025.
Our Chief Economist Nerida Conisbee provides a deep analysis of interest rate movements and house price trends, while our Head of Research Vanessa Rader offers valuable insights into the commercial property sector, particularly the emerging strength in retail assets and the structural changes facing the office market. Our Senior Data Analyst Atom Go Tian looks at shifts in the luxury property market and identifies key growth areas across the country.
The report also features expert analysis from our partners at Loan Market, examining the changing dynamics in property financing and lending trends that will impact buyers and investors throughout 2025.
Whether you're looking to buy your first home, expand your investment portfolio, or simply stay informed about market movements, understanding these trends is crucial for making well-informed property decisions.
Our network of over 1,000 offices across Australia, New Zealand, and Asia remains committed to helping you navigate these market dynamics with confidence and clarity. While the property landscape may be complex, our experienced agents and partners are here to guide you through every step of your property journey.
We trust this report will provide you with valuable insights to help you make informed decisions in 2025.
SAM WHITE EXECUTIVE CHAIRMAN LOAN MARKET
With 2025 on the horizon, the property market is shaping up in some fascinating ways. From changing buyer expectations to new market pressures, this year promises plenty of fresh opportunities—and no shortage of challenges, too.
In this report, we’re digging into the trends set to shake things up in 2025.
Loan Market CEO David McQueen explains why more and more Aussies are trusting brokers. With up to 80 per cent of Australians expected to work with a broker in the coming year, it’s a major shift in financial services that’s delivering some real wins for consumers.
Looking at commercial property, Loan Market Executive of Commercial Finance, Steve Scahill, shares why we are set to see increased competition within commercial lending. It’s a move that’s paving the way for brokers and banks to offer more flexible, tailored loan options.
Whether you’re a first-home buyer, investor, upsizer, downsizer, or just thinking about refinancing, staying ahead of the trends can make all the difference.
Whatever the year brings, you can count on our brokers at Loan Market to be ready to help you navigate your options and find what works for you.
We hope this report provides valuable insights and helps you feel ready to tackle whatever 2025 brings.
Here’s to a great year ahead!
Rate cuts in 2025
Interest rates in Australia have stayed high through 2024 even though other countries have started cutting theirs. This is mainly because Australia's economy has held up quite wellwe're not in a recession and plenty of people still have jobs. However, many households are feeling the strain of high living costs.
Looking ahead to 2025, financial markets think the Reserve Bank of Australia (RBA) will cut interest rates twice in the second half of the year. But this prediction could change depending on how things play out.
Several factors will influence when and how much the RBA cuts rates:
The most important is inflation. While it's now back within the RBA's target range, there are risks it could rise again. One big unknown is what happens in the United States. With Donald Trump winning the presidential election, this will boost government spending and put high taxes on Chinese goods. This could push up prices worldwide, including in Australia, making it harder for the RBA to cut rates.
The health of Australia's economy is another key factor. If people start spending less in shops, house prices fall significantly, or unemployment begins to rise, the RBA might need to cut rates sooner than planned. They'll be watching these signs closely throughout the year.
But if the economy keeps doing well and inflation stays 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.
The rising cost of living is putting pressure on the RBA to provide some relief to households through lower rates. However, they'll want to be sure that cutting rates won't cause inflation to pick up again. They'll need to balance helping struggling households against keeping inflation under control.
In summary, 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.
GL OBAL RA TE CUTS CO NTINUE
The US and UK were the most recent major central banks to cut its policy rate
Source:Ray White
The rising cost of living is putting pressure on the RBA to provide some relief to households through lower rates.
When rates do start to fall, this could encourage more buyers back into the market.
2 PREDICTION
NERIDA CONISBEE CHIEF ECONOMIST RAY WHITE
House price rises to continue but slowing
The Australian housing market is showing signs of cooling as we move into 2025, though the picture varies significantly across different cities. While Perth, South-East Queensland, and Adelaide continue to show strength, the larger markets of Sydney and Melbourne have slowed considerably, with prices nearly flat. Hobart and Canberra are also seeing minimal growth.
This pattern is likely to continue in early 2025, driven by several factors. More homeowners are feeling the strain of high mortgage payments, and we’re seeing an increase in property listings as some decide to sell. This higher supply of homes for sale could put downward pressure on prices in some areas.
However, there are three key factors that should help prevent any significant drop in house prices.:
First, Australia’s strong population growth continues to create ongoing housing demand. This creates a natural floor for how far prices might fall. This is particularly true in Perth and Brisbane where growth remains very strong, but is also the case in Melbourne and Sydney where international migration will remain strong, although potentially at lower levels compared to 2024.
Second, building costs remain high. The cost of constructing new homes hasn’t come down, which means fewer new houses are being built. This pushes more buyers toward existing homes, helping support prices in established suburbs. The lack of new supply also means any excess demand can’t be easily met with new housing.
Third, expected interest rate cuts later in 2025 could give the market a boost, particularly in more expensive cities like Sydney and Melbourne. These markets are more sensitive to interest rate changes because of their higher average mortgage sizes. When rates do start to fall, this could encourage more buyers back into the market and increase borrowing capacity.
The outlook suggests a period of modest price growth or stability rather than significant falls. Markets that have already slowed, like Sydney and Melbourne, might stay flat until rate cuts begin. Meanwhile, cities with stronger economic conditions like Perth could continue to see some growth, though likely at a slower pace than in 2024. The key timing to watch will be when interest rates start to fall, as this could mark a turning point for price growth in the larger markets.
WEAK VS STRONG HOUSE PRICES
A NNU ALISED GROWTH RA TE
Weak (Sydney, Melbourne, Canberra) vs strong (Perth, Brisbane, Adelaide) mean house price growth
PREDICTION
3
Shake up in luxury markets
ATOM GO TIAN
SENIOR DATA ANALYST
RAY WHITE
The pecking order of Australia’s premium property markets is experiencing its most dramatic realignment in years, with traditional hierarchies being challenged and new players climbing to the fore. In this context, we refer to luxury houses as houses priced in the top five per cent of the house market in each region.
At the top of the market, Sydney maintains its long-held position as Australia’s most expensive luxury housing market, though the story is far from dynamic. Despite experiencing one of the slowest growth rates in recent years, the top five per cent of Sydney house prices now exceeds $4 million, creating a substantial lead over other markets that appears unassailable in the near term.
Perhaps the most compelling development is occurring in regional Queensland’s coastal markets, particularly in comparison to Melbourne’s modest performance. The Gold Coast, with an impressive 50 per cent growth over five years, has finally achieved what many predicted: overtaking Melbourne as the second most expensive luxury market. With the top five per cent of Gold Coast houses now priced at $2.54 million compared to Melbourne’s $2.51 million, the shift represents a significant change in the market
hierarchy. The Sunshine Coast appears set to follow suit, boasting a robust 48.73 per cent five-year growth rate and current top five per cent house price of $2.37 million. Given Melbourne’s sluggish 9.75 per cent five-year growth rate, the Sunshine Coast is projected to join Sydney and the Gold Coast in the top three within the next 12 months.
The third notable shakeup involves the remarkable ascent of Brisbane, Perth, and Adelaide compared to Canberra’s simultaneous decline. Both Brisbane and Perth have now surpassed the $2 million mark for houses in the top five per cent, driven by impressive five-year growth rates of 55 and 53 per cent respectively. Canberra, once a strong performer, has plummeted from fourth to seventh place in just five years, with the top five per cent of house prices stagnating at $1.95 million. Adelaide, despite currently sitting at $1.8 million, shows the strongest momentum of all capitals with a 56 per cent five-year growth rate, suggesting it may soon push Canberra to eighth place.
Looking ahead, the market appears to be trending toward a new baseline, with all major cities except Darwin expected to reach or exceed the $2 million mark for luxury properties.
Despite experiencing one of the slowest growth rates in recent years, the top five per cent of Sydney house prices now exceeds $4 million.
A USTRALI A' S L UXUR Y HOUSE MARKET
Luxury house price growth in each major city from the last five years
Luxury refers to houses priced in the top 5% of the market.
Source:Neoval
Emergence of the Golden Arc
ATOM GO TIAN SENIOR DATA ANALYST RAY WHITE
The Australian housing market is witnessing a fundamental restructuring, characterised by the emergence of distinct price bands and the formation of what could be termed the “Golden Arc.”
Just as with the luxury house market, Sydney continues its solitary ascent with a geometric mean house price of $1.59 million. Sydney’s divergence from other markets has intensified, with the price gap to Melbourne expanding from 30 per cent in 2014 to 55 per cent in 2024. This widening chasm indicates a “two-speed” market, where Sydney operates under distinct market dynamics from the rest of the country.
Meanwhile, Queensland’s coastal markets have been experiencing remarkable growth to converge right behind Sydney. The Gold Coast and Sunshine Coast have established themselves as Australia’s second and third most expensive housing markets, with remarkably similar geometric mean house prices of $1.18 million and $1.14 million respectively. Both regions have also witnessed an identical 76 per cent increase in prices over the past five years. Notably, the Gold Coast overtook Melbourne in 2022, followed by the Sunshine Coast surpassing Melbourne in 2023. Brisbane, while still more affordable at a geometric mean house price of $996,000, is also showing signs of joining its coastal counterparts to complete the Golden Arc. The city has the second-highest five-year growth rate of 83.5 per cent, trailing only Adelaide.
In contrast to the upward trajectory of the Golden Arc, Melbourne’s housing market has seen a significant decline. Once the second most expensive market in the country, Melbourne now sits in fourth, 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.
Instead, Melbourne’s stagnation paves the way for a potential shift in the mid-market, with Perth ($882,000) and Adelaide ($877,000) now within a 17 per cent price range of Melbourne. Five years ago, these markets were spread across an 80 per cent price range. This compression suggests that Perth and Adelaide may soon overtake Melbourne in terms of house prices, further contributing to the formation of a distinct mid-market cluster between $850,000 and $1 million.
In summary, we can expect several key developments. Perth and Adelaide may surpass Melbourne in price, reinforcing the shift in the mid-market cluster. The Golden Arc is likely to emerge with Brisbane joining the Gold Coast and Sunshine Coast as premium markets. Finally, Sydney’s isolation at the top is expected to widen, further emphasising the “twospeed” nature of the market.
EMERGENCE OF THE GOLDEN AR C
Geometric mean house price jump from 2019 to 2024
Regional Australia’s $1 million club
ATOM GO TIAN
SENIOR DATA ANALYST
RAY WHITE
Regional Australia’s million-dollar club has undergone a dramatic expansion, growing from just two areas five years ago to encompass 20 locations today. Leading this prestigious group is the Gold Coast’s Surfers Paradise, where the geometric mean house price has reached an impressive $1.9 million, positioning it as the likely first regional area to breach the $2 million threshold. The Gold Coast’s dominance is further reinforced by BroadbeachBurleigh, which follows at $1.8 million, while the Sunshine Coast’s Noosa rounds out the top three with properties averaging $1.5 million.
The concentration of $1 million areas in Queensland’s coastal regions is unsurprising, with the Gold Coast and Sunshine Coast collectively accounting for 14 of the 20 million-dollar areas. New South Wales contributes five locations to this exclusive group—Wollongong, Coastal Richmond Valley, Southern Highlands, Tweed Valley, and Kiama-Shellharbour—while Victoria’s sole representative is the Surf Coast-Bellarine Peninsula in the Geelong region.
Looking ahead, four additional areas are poised to join this prestigious group within the next 12 months. The Sunshine Coast Hinterland, currently at $972,787, is projected to reach $1.05 million, supported by an impressive eight per cent average annual growth over the past decade. Both Ormeau-Oxenford in the Gold Coast and Newcastle in regional NSW, currently hovering around $960,000, are expected to reach $1.03 million, driven by consistent seven per cent annual growth rates. Lake Macquarie-East completes this emerging group, with current house prices of $955,128 expected to rise to $1.02 million in the coming year.
Beyond these imminent additions, seven more areas warrant attention, with current valuations ranging from $850,000 to $910,000 and decade-long growth rates between five per cent and eight per cent. While these markets may not reach the million-dollar threshold in the next 12 months, they show strong potential for inclusion within 24-36 months. Notably, Augusta-Margaret RiverBusselton in Western Australia’s Bunbury region stands poised to become WA’s inaugural entry into the regional million-dollar club. In contrast, Queensland continues to strengthen its position with emerging prospects in both the Gold Coast and Sunshine Coast regions, while New South Wales demonstrates the most diverse regional spread, with million-dollar areas distributed across six distinct regions.
Coastal areas feature prominently throughout this list, confirming the premium that buyers place on waterfront and oceanside locations. Additionally, many of these highvalue regions are satellite cities or areas within commuting distance of major metropolitan centres, suggesting that accessibility to urban amenities remains a key driver of property values. This combination of lifestyle appeal and practical connectivity appears to be a winning formula for regional property market success.
In summary, we can expect several key developments. Perth and Adelaide may surpass Melbourne in price, reinforcing the shift in the mid-market cluster. The Golden Arc is likely to emerge with Brisbane joining the Gold Coast and Sunshine Coast as premium markets. Finally, Sydney’s isolation at the top is expected to widen, further emphasising the “twospeed” nature of the market.
RE G IONAL A USTRALI A' S NEXT $1 MILLION SA 3S
Forecasted 2025 house price based on Nov 2024 geometric mean house price and average 10 year growth
Source :Neoval
Retail set to lead commercial property performance in 2025
VANESSA RADER HEAD OF RESEARCH RAY WHITE
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. Recent data shows retail assets have already begun this ascent, leading total returns for two consecutive quarters and posting a 2.8 per cent total gain in the latest results.
This rebound in retail property is particularly evident in transaction volumes, with retail now representing 41.1 per cent of all commercial transaction numbers in late 2024; a remarkable increase from its long-term average of 28 per cent. This surge comes as industrial sales, which dominated at 60 per cent of deals in 2023, have moderated to 50 per cent.
Source:Ray White, PIMS, Real Capital Analy cs
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. While certain categories like clothing and homewares have embraced e-commerce, and events like Black Friday drive online spikes, brick-and-mortar retail continues to demonstrate its enduring appeal.
The sector’s strength is particularly evident in metropolitan markets, where assets have outperformed their regional counterparts. Notably, secondary assets have surprised by yielding stronger income returns than prime properties. Neighbourhood and sub-regional centres have proven especially resilient when anchored by the right retail mix, with food, supermarkets, and services driving consumer spending.
Looking ahead, several factors support retail’s positive outlook. Limited new supply against strong population growth has driven improved occupancy and rental performance in
select markets. The retail landscape is also evolving, with entertainment offerings likely to emerge as a key component of successful centres, creating lifestyle destinations rather than pure shopping venues.
However, the sector faces some headwinds. The growing influence of social media marketplaces, with Facebook Marketplace activity growing 3.6 per cent annually, and Australia’s ageing demographic could reshape retail demands over the next two decades. These changes suggest successful retail assets will need to adapt to changing consumer preferences and needs.
As we move into 2025, while industrial assets remain an essential part of the retail ecosystem, investor attention is clearly pivoting towards retail assets. The sector’s ability to adapt and evolve, combining traditional brick-and-mortar retail with emerging entertainment offerings and online integration, positions it as the commercial property sector to watch in 2025.
VANESSA RADER HEAD OF RESEARCH RAY WHITE
The death of the secondary office market
The secondary office market is facing a critical crossroad as the pivot to premium accelerates across Australia’s major office markets. This structural shift, driven by evolving tenant demands and intensifying environmental, social and governance (ESG) pressures, is creating an unprecedented challenge for B-grade and lower quality assets, with many facing potential obsolescence without significant capital investment.
Corporate Australia’s focus on workplace experience and sustainability credentials has transformed from a ‘nice-to-have’ into a non-negotiable requirement. Major tenants are increasingly bound by corporate ESG commitments and reporting obligations, forcing their hand in relocating
to buildings with superior environmental ratings. 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.
If future take up of space echoes results seen in the post pandemic era, vacancies for secondary assets across all Australian markets will reach 22 per cent (from current 15.9 per cent) in the next five years, even considering consistent withdrawal of stock. Prime markets however will continue to thrive, vacancies will move downward from the current 13.7 per cent to 5.4 per cent by late 2029, opening up potential for new development.
Projected vacancy by quality grade
Source:Ray White, Property Council of Australia
Further compounding this issue is the capital expenditure required to bring older assets up to modern standards. Basic refurbishments no longer suffice – tenants demand end-of-trip facilities, sophisticated air conditioning systems, smart building technology, and high NABERS ratings. Given the high cost of upgrades in the current market, this cost may not be recoverable through rental uplift in the current market.
The financing landscape further stresses these challenges. Lenders are increasingly cautious about exposure to secondary assets, particularly those with significant vacancy or requiring substantial capital expenditure. This credit squeeze is forcing some owners to consider alternative uses, with conversion to residential or mixed-use becoming an increasingly attractive option in markets where planning regulations permit.
Our forecasts suggest the chasm between prime and secondary assets is expected to widen further as the market’s pivot to premium continues. While premium grade assets benefit from competitive tension among blue-chip tenants willing to pay for quality, secondary assets face a shrinking tenant pool and declining rents. This dynamic is particularly evident in suburban markets, where the lack of scale often makes substantial upgrades economically unviable.
Therefore, the secondary office sector faces a turning point. Buildings unable to meet rising environmental standards and tenant expectations risk becoming stranded assets. 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. For secondary assets without viable conversion potential, the future appears increasingly challenging as the pivot to premium reshapes Australia’s office landscape.
VANESSA RADER HEAD OF RESEARCH RAY WHITE
Private investors to prop up the commercial market for another year
The commercial property market is poised for a dynamic shift in 2025, with anticipated interest rate reductions expected to reignite transaction activity across all sectors. Private investors, armed with improved debt serviceability and renewed confidence, are likely to lead this resurgence. 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.
The retail sector’s rebound is expected to gain further momentum in 2025, with private investors strategically targeting metropolitan assets underpinned by strong trade area demographics and essential service offerings. Neighbourhood centres anchored by supermarkets, combined with healthcare services and daily needs retail, will likely remain highly sought after. The evolving tenant mix towards experiential retail and services is expected to further strengthen the sector’s appeal, particularly in assets requiring strategic repositioning to capture changing consumer preferences.
The industrial sector continues to benefit from structural undersupply in key markets. Private investors are increasingly focusing on the smaller end of town such as industrial units and last-mile logistics facilities, particularly those with value-add potential. Owner occupiers will continue to be in competition for these assets with any downside risk limited.
2025 could mark a turning point for the office sector as the market finally adjusts to hybrid working patterns. Metropolitan assets with strong tenant covenants and modern amenities are attracting renewed interest, particularly
buildings that have already undergone ESG upgrades. The flight to quality trend is expected to create opportunities for investors willing to reposition B-grade assets in strong locations, especially as occupiers seek better workplace experiences to encourage office attendance.
The smaller ticket alternative sector continues to attract private investor attention, with these assets offering compelling income security through structured rental growth. Childcare centres and service stations, delivering annual rental increases with long lease terms, remain highly sought after by yield-focused investors.
Private capital’s agility and ability to move quickly on opportunities will become increasingly valuable as the market transitions to a more favourable lending environment. Lower debt costs, combined with stabilising values, should create favourable conditions for private investors to acquire assets with strong underlying fundamentals.
The strategic focus for private investors in 2025 will likely centre on assets offering both defensive income streams and clear repositioning potential, as improved debt serviceability drives renewed competition for quality assets. The ability to execute active management strategies and identify emerging sector opportunities will be key differentiators for successful private investors in the year ahead.
DAVID MCQUEEN CHIEF EXECUTIVE OFFICER LOAN MARKET GROUP
Eight in 10 Aussies to turn to brokers for better
lending
While Australians continue to grit their teeth against skyrocketing cost-of-living pressures, the decision to take out a mortgage won’t be one taken lightly by those looking to secure a place to live over the next 12 months. Now, more than ever, it’s important to would-be buyers, whether they are looking for their first home, to upsize, downsize or to invest, to know the choices that are out there. While banks continue to report record profits, they have also closed branches and suggested a shift towards other avenues to drive stronger financial returns. This all means that simply walking into the local bank branch to “see what they can do” is no longer cutting it.
It’s why thousands of buyers are now trusting brokers, rather than banks, to make sure they get more bang for their hard-earned buck. The trend is one we expect will continue to grow over 2025, given the impressive market share gains by brokers in the past 12 months.
2024 marked the first time ever that brokers settled more than $100 billion in loans over a three-month period, as reported by the Mortgage and Finance Association of Australia (MFAA). It was also a year where brokers consistently secured more than 70 per cent of new residential loan market share (peaking at 74.1 per cent) - meaning more than seven in 10 buyers went to a broker to secure a home loan.
As outlined in this report, buyers should see some rate relief over the next 12 months, which is set to flow through to market confidence. As rates change, it’s likely lenders will be inconsistent in what they pass on. This means those with existing loans will require even more independent assistance, while new buyers will see affordability trends differ, so will require expert independent advice.
This could easily mean that more consumers will trust a broker, as much as eight in 10 Aussies, to secure them better lending opportunities in 2025.
It’s why thousands of buyers are now trusting brokers, rather than banks, to make sure they get more bang for their hard-earned buck.
Chasing deals: The rising rivalry in commercial lending
STEVE SCAHILL GROUP EXECUTIVE, COMMERCIAL FINANCE LOAN MARKET GROUP
It’s set to be an interesting year in the commercial space after a bumper 2024. It will be interesting to see if growth tapers off or if the strong performance continues.
What’s certain is that there will be strong competition for commercial loans by lenders - albeit we may see some of the major lenders being selective in the types of transactions they are willing to fund.
What that means is it may become more expensive - and more tricky - for purchasers of commercial property to land a deal with a major institution, due to the banks’ lower risk appetite and a more conservative approach to lending. Many of the deals that will be on offer for commercial mortgages in 2025 simply won’t stack up for purchasers.
Despite this, we still see plenty of funds out there that investors want to deploy into the commercial space across the coming year. This extra capital will still flow through to the market - albeit to a wider range of lenders.
One of the ways that’s happening is through real estate investment funds, such as Ray White Capital, which pool funds to put towards specific developments or projects.
We also expect to see a lift in the number of non-banks coming to the table in the commercial space, which are rising in popularity with commercial brokers across the country due to their flexibility and ability to adapt their products to the credit profiles of small-time investors and businesses, which is a win for anyone looking for a funding boost in the new year.
It’s a space we’ll be watching closely in 2025.
We also expect to see a lift in the number of non-banks coming to the table in the commercial space.
END PAGE AUTHORS PHOTOS
RAY WHITE
NERIDA CONISBEE
VANESSA RADER
PAOLO SUMULONG
ATOM GO TIAN
JORDAN TORMEY
LOAN MARKET
DAVID MCQUEEN
STEVE SCAHILL