Navigating the 2025 Property Market: Which Aussie Suburbs Are at Risk of Decline?

Navigating the 2025 Property Market: Which Aussie Suburbs Are at Risk of Decline?

The Australian property market has seen its fair share of highs and lows, and 2025 is shaping up to be an exciting year. With economic conditions evolving quickly, many eager buyers and investors are left curious about how the market will unfold. Will it be a time of opportunity, or will challenges arise? One thing is for sure: the journey ahead promises to be anything but ordinary!

Factors such as rising interest rates, inflation pressures, and changing government policies are creating both challenges and opportunities. Furthermore, global economic trends, including supply chain disruptions and international market fluctuations, are shaping Australia’s housing landscape.

One of the biggest concerns for property buyers is affordability. As interest rates rise, mortgage repayments become more expensive, pushing some buyers out of the market. At the same time, rental demand is surging due to a lack of available housing, which is affecting the decision-making process for both investors and tenants. 

The property market is also being influenced by population shifts, with more Australians relocating in search of affordability, lifestyle improvements, or better job prospects.

As the real estate landscape shifts, we see a tale of two markets. While some areas flourish with steady growth, others are grappling with decline. Once-thriving suburbs are now facing challenges like oversupply, job losses, and waning buyer interest. To navigate this complex environment, it’s vital to understand the key factors driving property prices. With this knowledge, buyers and investors can make confident decisions and avoid potential financial pitfalls.

Whether you’re a homeowner looking to protect your investment, an investor seeking growth opportunities, or a first-time buyer hoping to enter the market at the right time, staying informed about trends and risks is essential. 

By keeping an eye on economic indicators, property data, and expert forecasts, you can position yourself to make the best possible property decisions in 2025.

Why Do Some Suburbs Experience Property Value Declines?

There are several reasons why certain suburbs see property prices fall. Let’s take a look at some of the key factors:

1. Rising Interest Rates & Affordability Pressures

With the Reserve Bank of Australia (RBA) raising interest rates to combat inflation, mortgage repayments have become more expensive. This has put some buyers out of the market, reducing demand and, in turn, falling property prices in certain areas.

2. Oversupply of Housing

If there are too many properties on the market and not enough buyers, prices tend to drop. This is especially common in high-density areas where new apartment developments have flooded the market.

3. Economic Uncertainty & Job Market Shifts

Certain suburbs rely on specific industries, such as mining, tourism, or manufacturing. If these industries take a hit, local employment drops, affecting consumer confidence and property demand.

4. Changing Population Trends

A suburb’s desirability can decline if people move elsewhere, whether for affordability, lifestyle changes, or better job opportunities. This can lead to weaker demand and falling property prices.

Suburbs at Risk of Property Value Decline in 2025

Various suburbs across Australia are beginning to exhibit indications of weakening property prices as we move closer to 2025. This trend could have significant implications for buyers and investors alike. To better understand the situation, let’s explore the specifics by taking a deeper look into the housing market dynamics in different cities, exploring factors such as supply and demand, local economic conditions, and recent sales trends in each area.

Sydney and Melbourne: Signs of a Slowdown

Sydney has long been Australia’s most expensive property market, but prices are under pressure. House prices dipped by 0.1% in the last quarter, bringing the median price to $1,645,444—marking the second consecutive quarter of decline.

According to recent property reports, unit prices in Crows Nest have fallen by 20.7% to $900,000. Other at-risk suburbs include Parramatta, Zetland, and Homebush, where an oversupply of apartments is driving prices down.

Melbourne’s property market is still recovering from the impacts of the pandemic. While house prices saw a slight decline in late 2024, some suburbs have recorded significant declines:

• Chadstone: Unit prices fell by 33.3% to $505,000.
• Sunshine: Unit prices declined 18.9% to $450,000.
• Barwon Heads: House prices dropped 20.5%.
• Warracknabeal (Regional VIC): House prices fell 19.6% to a median of $198,000.

High vacancy rates in Docklands, Southbank, and Tarneit also put downward pressure on property values.

Perth: A Market Defying the Trend

Unlike other cities, Perth’s property market has been on fire. In 2024, house prices surged by over 24%, reaching $740,000 in early 2025. Experts predict further growth of up to 10% this year, driven by strong population growth and high rental demand.

Hobart and Canberra: Mixed Results

Hobart

The median house price was $693,924 in late 2024, a small 0.6% increase for the quarter but a 0.5% annual decline.

• Unit values dropped 4.2% over the quarter and 3.6% annually.
• Rental yields are below the national average, making it a less attractive investment option.

Canberra

• Property values declined 0.4% in 2024, following a small rise in 2023.
• The median dwelling value is now $850,534, with a 0.5% drop in January 2025.

Brisbane and Adelaide: Stability Amid Uncertainty

Brisbane 

Despite rising interest rates, Brisbane’s property market has shown resilience. While some outer suburbs are experiencing slight price corrections, demand remains strong in established areas like Paddington, New Farm, and Bulimba. However, suburbs with a high supply of new apartments, such as Chermside and Fortitude Valley, may see price declines due to an oversupply of units.

Adelaide 

Adelaide continues to be one of Australia’s most affordable capital cities. Suburbs such as Seaford and Christies Beach are seeing steady demand, but areas with high investor activity, such as Munno Para and Salisbury, could be at risk if rental yields drop or interest rates increase further.

Some other suburbs also experienced significant property price changes in Queensland. Here is a detailed look at the top-performing suburbs:

Top Suburbs for House Price Growth:

Top Suburbs for Unit Price Growth

How to Spot a Suburb at Risk

Before buying property, keep an eye out for these warning signs:

• Longer Selling Times – If houses are sitting on the market for too long, it’s a sign that demand is weakening.
• Oversupply of Rentals – A high number of vacant rental properties could indicate that landlords are struggling to find tenants.
• Falling Median Prices – A consistent drop in prices suggests declining buyer confidence.
• Negative Population Growth – Demand will likely fall further if more people are leaving than moving in.

How to Choose a Safer Investment Suburb

If you’re looking to invest or buy property, consider these key factors to find a safer suburb:

1. Look at Crime Rates – Lower crime rates generally lead to better long-term property values and higher tenant demand.
2. Check Economic Stability – Suburbs with diverse job opportunities and strong local economies are likelier to hold their value.
3. Monitor Population Growth – Areas with increasing populations usually see rising property demand and price growth over time.
4. Research Historical Market Trends – Look at past price movements to see if a suburb has a history of steady growth rather than boom-and-bust cycles.
5. Analyse Vacancy Rates – A low vacancy rate means properties are in demand, making it easier to find tenants if you invest.
6. Consider Infrastructure and Amenities – Properties near schools, hospitals, parks, and transport hubs tend to perform better over time. Future infrastructure developments can also drive price growth.
7. Stay Updated on Policy Changes—Government policies, such as zoning laws and tax incentives, can affect property values. Staying up to date with these changes can help you make informed decisions.

Looking Ahead: Buying In 2025

The Australian property market in 2025 is a mixed bag. Some areas are at risk of decline, while others remain strong investment opportunities.

If you’re planning to buy, make sure you do your research. Avoid high-risk suburbs and focus on locations with strong fundamentals. Consider factors like long-term growth, rental demand, and infrastructure projects before deciding.

For investors, patience can be key—waiting for the right opportunity might be better than rushing into a risky suburb. Staying informed about the latest trends and expert forecasts will give you an edge in this unpredictable market. At the end of the day, the best decision is one that aligns with your financial goals, risk appetite, and market knowledge.

Need help navigating the market? At RateSeeker, we specialise in tailored home loans and interest rates to suit your unique situation. Whether you’re buying your first home, refinancing, or investing, our expert mortgage brokers will help you secure the best loan for your needs.

Get in touch with us today and take the next step towards your property goals with confidence!