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Lifestyle purchases and Melbourne resurgence: The property trends that shaped 2025
The national property market has been shaped by numerous trends in 2025, with a capital city market poised to rebound, while lifestyle choices have driven property demand, according to John McGrath.
As 2025 comes to a close, McGrath Estate Agents CEO John McGrath said the property market had undergone significant fluctuations in both pricing and emerging trends.
“With just over two weeks of 2025 remaining, Christmas budgets are expected to be as tight as they were last year as the cost-of-living crunch continues,” McGrath said.
“But there has been some good news for the property market this year, and there could be more to come in 2026.”
According to Cotality’s November Home Value Index, Perth, Brisbane, and Adelaide have continued to grow since late 2023, and Sydney has remained the powerhouse of Australia’s property market.
McGrath said that while other cities continue to grow, Melbourne had all the signs that it could reemerge as a standout performer over the next 18 months.
“The southern city’s property market has gained momentum this year with its $823,495 median price offering the best value in Australia by far, with prices certain to rise significantly over the next three years,” McGrath said.
Nationally, McGrath said that buyer demand had begun to stabilise after its strong growth throughout 2025.
“This year’s first three rate cuts since November 2020 saw first home buyer demand rally towards the end of this year too,” McGrath said.
“Government incentives such as the expanded 5 per cent deposit guarantee scheme, from 1 October, further encouraged this group.”
The 2025 market trends
McGrath said that among the trends that emerged throughout the year, the differences between generations' priorities had shifted drastically.
Among older generations, McGrath said Generation X had the largest real estate portfolio at $1.31 million, surpassing the Baby Boomers' $1.3 million.
“The cashed-up Generation X group – otherwise known as the sandwich generation – is now the overall capital gains winner in the Australian generational real estate race,” McGrath said.
While older generations have been motivated by portfolio growth in 2025, Gen Z and Millennials have shifted the drivers of their property purchase decisions.
The report found that younger buyers have changed their view on what they value in a property, with “walkable” suburbs in metropolitan and regional centres, as well as pet-friendly and environmentally conscious homes proving to be the most sought-after options.
“Such factors are now changing how Australian properties are being constructed and what buyers are looking for,” McGrath said.
McGrath said while some clear trends had emerged, it was difficult to predict what would happen in the new year, particularly regarding interest rates.
“The experts were all predicting further rate reductions, but that view seems to have softened, with some even predicting a rate rise.”
“I think we will see lower rates by the end of 2026, but it may be slightly slower than initially predicted,” McGrath concluded.