We've seen a return to unified growth around the country in recent months, broadly lifting property prices as interest rates fall. 

Six months ago, expectations for 2025 were somewhat cautious, but this year already looks to be overdelivering in many respects. So, is there further room to grow? 

Here’s how the market stacks up against past forecasts, what forces are pushing prices higher right now, and where the experts think we’re headed next.

How is the market tracking against expert forecasts?

Looking back to the beginning of the year, there was a broad sense of cautious optimism coming from economists and property pundits. 

The big banks saw modest growth on the horizon: Westpac forecast +3.0 per cent national growth for 2025, while NAB saw a slightly rosier +4.2 per cent gain for the year. 

SQM Research boss Louis Christopher's outlook was significantly more bullish, predicting overall gains of between +6 and +10 per cent in 2025, on the condition of rate cuts beginning early in the year.

The consensus was that the mid-sized capitals (Perth, Brisbane and Adelaide) would have another overpowered year, while Sydney and Melbourne would start to recover after a difficult 2024. 

So, at the halfway point in 2025, does it look like the forecasts are on track? 

According to Cotality data, national property values have risen +2.4 per cent since January, with +1.4 per cent of that arriving in the June quarter alone.

Darwin, Brisbane and Perth have been the standout performers, with year-to-date gains of +7.7 per cent, +3.2 per cent and +2.1 per cent respectively. The rest of the capitals are mostly sitting around the +1.8 per cent range.

Growth has been gradually accelerating over the past few months, too. 

At the pace things are moving now, the banks' forecasts are looking like they may have been on the conservative side, while the lower end of SQM Research's outlook could be reached by year's end. 

Interest rate cuts have been a key driver of growth

There have been a number of considerable tailwinds helping to push our property markets forward so far in 2025. 

For one, there is still a widespread shortage of available stock on the market. Cotality analysis shows that, nationally, total listings are -13.2 per cent below the five-year average, suggesting that buyers are having to compete over a smaller pool of properties. 

Population growth, while having eased off from the record-highs seen in recent years, remains above the pre-Covid average, adding further demand-side pressures.  

Federal Labor's win at the polls this year has also served to boost consumer confidence, and their policies around helping buyers to enter the market are expected to continue to stoke buyer demand. 

But the number one driver of price growth in 2025 has to be interest rate cuts. 

The RBA has already lowered the cash rate twice this year, and while the central bank made the surprise decision to keep things on hold in July, it's widely anticipated that more cuts are on the way.

Cotality's research director Tim Lawless said "The continued momentum we're seeing across almost all markets is in no doubt being fuelled by rate cuts — both those that have already happened, but also potential cuts in the coming months."

Following the second rate cut, SQM Research reported a +5.4 per cent rise in new listings nationally in May, led by Sydney and Melbourne. This suggests sellers are beginning to take advantage of improved conditions in the near term. 

But rising auction clearance rates and sales volumes rising "indicate the housing market is at present, recording more home buyers in the marketplace," Louis Christopher said. 

"This, combined with ongoing low levels of dwelling completions, are all fuelling the conditions for a short-term surge in dwelling prices."

More price gains are expected to come

So far in 2025, the forecasts we've looked at have been relatively close to the mark. But, with more clarity on the path that interest rates may take, some fresher predictions are now available. 

Domain recently released its Housing Market Forecast Financial Year 2026 which paints a picture of continued, steady growth. 

Their forecast for the next 12 months is for Australian house prices to rise +6 per cent, with unit values increasing +5 per cent. 

Sydney is positioned for the highest rate of growth, though Domain believes all six capital cities covered will see gains of at least +3 per cent over the financial year. 

"Growth is anticipated to accelerate marginally compared to FY25, supported by lower borrowing costs, government support for first home buyers and rising household incomes," the report reads. 

"Additionally, a national housing shortfall remains a key driver, with supply continuing to fall short of demand generated by population growth – although this pressure is expected to gradually ease as migration slows and construction costs stabilise."

Cameron Kusher, formerly REA Group's head of economic research, expects even stronger growth for FY26. 

He's forecasting national growth of between +6 and +8 per cent over the next 12 months, with Perth, Brisbane, Adelaide and Darwin achieving gains beyond those levels. 

"This growth will be fuelled by lower interest rates, government support for first home buyers, persistent strong population growth and insufficient new housing supply," Mr Kusher explained.

He added that "Current market pricing has the cash rate bottoming at around 3 per cent and remaining at that level until the end of the financial year," which would mean a 1.25 per cent total reduction in the cash rate. 

"125 basis point reductions to the cash rate in a 12 month period don’t happen very often, and they have historically led to increases in property prices thereafter."