As real estate agents returned to their respective offices in January, anecdotal evidence suggested an air of confidence that the strength of the 2025 market would continue into the first quarter of this year.
A new report from Domain – one of the two leading real estate portals – suggests the market is going to have a strong six-month run before settling into a more subdued rhythm from July onwards.
Its “Forecast Report” suggests Sydney and Brisbane will experience double-digit price growth in the first half of this year.
It bases this claim on the growth of real incomes and the impact of the Federal Government’s Home Guarantee Scheme (HGS) that is designed to ensure first-time buyers do not have to pay Lenders Mortgage Insurance – a five-figure impost to protect a lender from a buyer defaulting on their loan.
Domain’s short-term view of the market could be upset by the constant speculation of a rise in interest rates. Nevertheless, it calculates the Sydney median house price will reach $1,924,430 by the end of next December – a $173,000 increase. Melbourne prices will move $87,000 higher to $1,170,168.
A 13% annual increase is expected for Brisbane, as prices there move north to $1,185,983.
The cities of Canberra, Perth and Adelaide will all command average prices of more than $1 million by the end of this year, according to Domain.
For those seeking to buy in the near term, here are six tips for getting your strategy right:
Time to prepare – If you are a seller-turned-buyer, try to sell in the first half of the year to capture peak prices. If you’re a pure buyer, you might find slightly less competition and a “slower rhythm” if you can wait until after June.
Deposit surge – With Sydney and Brisbane tipped for double-digit growth (Sydney alone rising by $173,000), your deposit requirement is a moving target. Calculate your deposit based on the projected December medians (e.g. $1.92m for Sydney). If you wait six months to buy, you may need an extra $10k–$20k just to maintain your 10% deposit ratio.
First-time tips – If you’re a first-time buyer, check your HGS eligibility immediately. Avoiding LMI will save you several tens of thousands of dollars that can be diverted into your bidding budget.
Build a buffer – Get your pre-approval now but stress-test your budget. If the constant speculation turns into a reality later this month, your borrowing capacity might drop. Ensure your strategy doesn’t rely on rates staying exactly where they are today.
Borderless buyers – If you are an investor, look at the growth trajectory of Brisbane (13%). While it’s getting expensive, it’s projected to outperform Melbourne in terms of capital gain.
Moment of clarity – Be ready to act fast in late February if the interest rate stays on hold as there will be a flood of confident buyers hitting the market.