After dipping in December and January, house prices stabilised in February, but affordability challenges and limited supply continue to weigh on the market.
Westpac’s latest Housing Pulse report forecasts 3% national price growth in 2025, with capital city markets becoming more aligned. However, buyer sentiment remains cautious despite the RBA’s recent rate cut and expected further reductions this year.
While pent-up demand is rising — with a third of respondents planning to buy in the next 12 months — first-home buyer activity remains low due to affordability pressures.
On the supply side, housing completions are expected to hold at 171,000 per year until 2026, well below the 240,000 needed annually to meet government targets. This will likely keep pressure on prices.
Growth in WA and QLD is slowing after a strong performance, while Sydney and Melbourne are forecast to see a modest growth of 3% and 1%, respectively.
With affordability and supply challenges persisting, the impact of future rate cuts remains uncertain.
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