From small spaces to sustainability, big tech and ‘barkitecture’ - these are the real estate trends shaping 2025.

• The Trump Effect - If Donald Trump imposes high taxes on Chinese goods when he enters the Oval Office it could push up prices globally, fuelling inflation in Australia. This could delay any reduction to the official cash rate and potentially dampen Australian house prices. On the other side of the coin, if the Australian economy starts to struggle and unemployment rises the Reserve Bank may need to cut rates sooner than anticipated.

• Granny Flats - Driven by families looking to support ageing grandparents, children staying at home until much later in life, and first homebuyers wanting a tenant to help pay off mortgage debt, expect demand for granny flats to keep growing this year. In SA, searches for houses with Granny Flats jumped 114% in 2024 when the government allowed them to be rented to anybody instead of just family members!

• Rents - Rental growth is likely to remain subdued as overseas migration returns to more normal levels and the average household size continues to trend higher towards pre-COVID levels. Currently, the median rent consumes a third of household income.

• Boomers - The youngest of the Baby Boom generation get access to their superannuation this year, which will prompt many to make new life choices. From sea and tree changes, Boomers will be taking generous budgets to comparatively affordable towns.

• ‘Barkitecture’ - Thoughtful inclusions for homeowners but sure to boost rental appeal and tenant retention. When remodeling, people are opting for:
  • Floorboards with rugs instead of carpets
  • Ledges for cats to laze in sunny windows
  • Creative storage spaces – like nooks under staircases for kennels 
  • Wash stations in laundries (or handheld shower heads in bathrooms)
• Energy Efficiency - Demand for energy efficient homes featuring solar panels, water tanks, smart thermostats, and sustainable building materials is no longer optional but expected. Battery storage is uber appealing, now that power companies are threatening to charge homeowners for the power they export.
• Interest Rates - Rates are expected to remain relatively high throughout early 2025, with only modest cuts anticipated throughout the year. This will continue to impact borrowing capacities and overall buyer sentiment. 
• Moderate Growth in Regional Areas - The property market is projected to see consistent growth, particularly in regional and outer suburban areas. These regions are becoming increasingly attractive due to lifestyle changes and affordability, with investors focusing on high-growth corridors around regional centres and metropolitan outskirts.
• Rising Listings - The number of property listings is expected to continue increasing as homeowners respond to high mortgage pressures. This could create a more balanced supply-demand dynamic but may also exert downward pressure on prices in some areas.