Overall, Australian house prices are projected to increase by 4% to 6% in 2025, contingent on potential interest rate reductions.

Dr. Nicola Powell from Domain predicts a 'year of two halves' in 2025, with stronger price growth anticipated in the latter half due to expected interest rate cuts.

The recently approved Help To Buy scheme by the federal government is anticipated to attract more first home buyers, particularly in the lower segments of the Sydney and Melbourne markets.

First homebuyers are increasing their market share, but a decline in investment activity is impacting rental supply and affordability.

In the rental market, price growth has slowed significantly, with a mere 5.3% increase over the past year, marking the slowest growth since April 2021.

As affordability strains continue, many renters are opting to share homes or live with family, reflecting rising average household sizes in capital cities.

Despite the Reserve Bank of Australia's higher-than-expected interest rates, the property market has shown resilience throughout 2024.

Forecasts indicate that Sydney's property prices will align with national trends, while Melbourne is expected to see weaker growth, with house prices rising between 3% and 5% and unit prices potentially declining by up to 2%.

This resilience is attributed to a chronic shortage of homes, persistent demand, and challenges in the construction sector, which are expected to drive property prices higher.

Looking ahead to 2025, house prices in Brisbane are projected to rise by 5% to 7%, while Adelaide is expected to see increases of 7% to 9%, and Perth may lead with growth of 8% to 10%.

However, the first half of 2025 may experience weaker conditions as buyers remain cautious, although improved economic sentiment could encourage market participation later.

Current trends suggest that property prices are losing momentum, a trend expected to persist into 2025.