The top seven home trends driving profit in 2025 – latest architecture and design news

Hopping on home trends can be tricky, and you might even struggle to incorporate them into your property. However, they produce excellent returns on investment (ROI) when done right.

The Australian property market is in for a shake-up in 2025. Many factors feed the trends — shifting buyer priorities, lifestyle changes and financial realities. These developments open doors for the savvy investor, the first-time home buyer and real estate agents to profit from the rising demand and greater resale value.

1. Smaller homes with maximised functionality

Budget constraints are a reality for many Australians, prompting a shift towards smaller, more efficient homes. Compact spaces designed with intelligent layouts are flying off the market, especially in urban areas with limited available land.

“Buyers are increasingly open to choosing homes that align with their current stage of life and the specific needs of their families,” says Laurie Cosentino, General Manager of Domaine Homes.

Smaller homes tend to sell faster, and their affordability and practicality often lead to competitive bidding. Those with clever designs appeal to a wider demographic, from empty nesters downsizing to first-home buyers looking for value. To maximise the impact of small rooms, combine a guest room and an office, which can transform between weekdays and weekends.

If you’re investing, properties that make the most of their space can fetch top dollar when buyers see the potential for a cosy but practical lifestyle.

2. Energy-efficient and climate resilient homes

Sustainability and energy efficiency have become major considerations for Australian buyers.

Energy-efficient homes with solar panels, water tanks and clever insulation are getting the thumbs-up from buyers who want to keep their bills down and their conscience clear. Homes with features like solar panels, battery storage and double-glazed windows are in high demand.

Climate-resilient features like flood barriers, drought-resistant landscaping and water catchment systems are gaining traction.

According to Zillow, 43 per cent of home buyers only considered properties in low flood-risk areas. Investors keen to justify higher asking prices can incorporate flood barriers to attract climate-conscious homeowners.

Don’t overlook the impact of home features upgraded with an energy-efficient design. For example, insulated garage doors reduce heat loss and enhance a home’s overall energy performance, particularly in climate-sensitive areas.

Upgrading to sleek, insulated designs saves energy and is a surefire way to boost kerb appeal and resale value.

Buyers are happy to spend more for homes with green credentials, making eco-friendly upgrades a great idea if you want to increase your property’s value.

3. Personalised and expressive

Australian buyers are embracing individuality in their homes, moving away from overly stylised designs and opting for spaces that reflect personal taste and function. Interior designer Brahman Perera observes that clients are leaning toward sincere, meaningful spaces with personal elements that create authenticity.

A unique trend has emerged — buyers are gaining a newfound awareness about investing in spaces that reflect their personality. Personalisation adds value, whether it’s bespoke furniture, collections of art or purpose-driven spaces like wine rooms or wellness studios.

Those selling or renovating can think about adding features that’ll have buyers saying, “That’s just what I need!”

4. Dedicated home workspaces

Since the pandemic began, dedicated workspace has been the most sought-after feature in any home. Nowadays, practically everyone needs a home office or works from home in some capacity, so the traditional study nook is no longer sufficient.

Although down by a single per cent from 2023, more than a third of Australians reported a work-from-home employment set up. With remote work now a permanent fixture in many Aussies’ lives, home designs in 2025 prioritise dedicated workspaces. These range from full-scale home offices to compact IT nooks integrated into living areas.

“Nearly every home design now includes a study or workspace option,” Mr Cosentino said.

Investors, take note — properties with versatile workspaces will likely command higher rents and sale prices. It’s all about creating a home that suits modern living, while still feeling comfortable and inviting. Homes with well-designed, adaptable workspaces can attract professionals seeking functionality in their living environments.

5. Light interiors with bold accents

When it comes to interiors, Aussies still love a classic clean look, particularly in high-investment areas like wall colours and flooring. However, bold accents are returning in soft furnishings, tiles and cabinetry. Think light timber floors, neutral walls and pops of colour that give a space character without overdoing it.

“We’re observing a clear shift toward lighter tones, with soft timber colours and subtle stains becoming increasingly popular,” Mr Cosentino said.

With individuality making a comeback, homebuyers are looking for deeply personal decor that is far from formulaic. Bold colours and big statements are returning, but in a boldness that many consider refreshing.

For property professionals, staying updated on these design preferences can make staging and renovating properties more effective. It’s an easy way to get buyers hooked without breaking the bank.

6. Cozy, purpose-driven spaces

Gone are the days when cozy used to have a negative connotation in the real estate market. It’s grown into a sought-after design trait as homebuyers ditch sprawling floor designs.

In 2025, buyers will seek cozy, colour-saturated rooms that serve specific purposes, such as dens, dining rooms or media spaces.

These purpose-driven spaces can also include hobby rooms, fitness studios or outdoor entertaining areas — features that add character and functionality.

By emphasising these unique spaces during sales or renovations, sellers can command higher prices and attract buyers seeking a home that is small yet packs a punch.

7. Local Australian designers

In 2025, there will be a renewed focus on supporting local designers and sourcing Australian-made materials. Whether a handcrafted kitchen or a backyard deck built from sustainable Aussie timber, these details resonate with people who care about quality and community.

Choosing local designers supports the economy and taps into a growing demand for homes that resonate with Australia’s unique aesthetic and environmental conditions.

Houses built with locally sourced materials often benefit from reduced construction costs, faster build times and increased buyer confidence.

Melbourne-based interior designer Tali Roth sees a shift toward sustainable, meaningful design.

“I obviously see a trend toward sustainability in design, which is awesome,” Ms Roth said.

“However, it doesn’t always trickle down into my work in the high-end residential sector as much as I would like.”

Stay ahead with profitable property trends

Leveraging these trends can significantly enhance ROI for Australian investors, property professionals and homeowners. Homes designed with functionality, energy efficiency, personalisation and flexibility in mind are better positioned to attract buyers and command premium prices.

By incorporating these trends into your investment or renovation strategies, you can stay ahead in Australia’s competitive property market and capitalise on the opportunities 2025 offers.