Australian Economy and Commercial Real Estate Trends - Q2 2025
Growth expectations for this year have come under pressure, with forecasts for economic growth revised downwards compared to the beginning of the year, although the impact has not been uniform across markets. Volatile trade conditions and a high degree of geopolitical uncertainty mean that further revisions to these forecasts are likely. Nevertheless, the direct impact on global real estate markets has been relatively limited thus far.
Australian economic growth forecasts for 2025 have also been revised downwards, mirroring most other advanced economies. Despite this, economic growth is forecast to pick up in 2025 relative to the prior year. The Reserve Bank of Australia’s (RBA) Statement on Monetary Policy (August 2025) also showed a downward revision to economic growth, as it downgraded the outlook for productivity. The RBA reduced its long-term assumption for productivity growth from 1.0% to 0.7%, translating to softer economic growth.
A continued easing monetary policy cycle, inflation sustainably within the Reserve Bank of Australia's (RBA) target range of 2-3%, and real wage growth are expected to boost household consumption over the remainder of 2025. The latest futures market data indicate that markets are pricing in two additional cuts in the Official Cash Rate (OCR) by the end of 2025.
The medium to long-term outlook remains positive. Based on the latest data from Oxford Economics, Australia is projected to lead advanced economies in both population growth and economic expansion over the next decade. As such, global investors are expected to sustain their strategic interest in Australia, attracted by strong economic fundamentals, premium credit rating, political stability and transparent regulatory environment.