The Australian property market is poised to continue its current trajectory into the beginning year, predominantly favouring home buyers, pending potential interest rate cuts, Domain reported.
According to the latest figures from CoreLogic, Sydney experienced a modest rise in property prices by 2.3%, while Melbourne saw a decline of 3% as 2024 concluded.
This trend reflects ongoing high interest rates since 2022, which have diminished home buyers’ borrowing ability coupled with an increase in property listings.
Adelaide Timbrell (pictured above), ANZ’s senior economist, projects that 2025 could witness a revival in the property market if economic conditions align favourably.
“As long as we don’t see unemployment drop to those really low levels during that high inflation period and as long as inflation keeps going in that right direction,” Timbrell said.
She anticipates that these factors could prompt the Reserve Bank (RBA) to implement rate cuts, which would enhance borrowing capacities and potentially boost housing prices.
However, until such financial relief emerges, Timbrell predicts a rise in larger household formations as a strategy to manage affordability pressures.
Diaswati Mardiasmo, chief economist at PRD Real Estate, noted that Australia is lagging behind its international counterparts like the US, the UK, and Canada in reducing rates.
“We were six months behind in increasing so we’re six months behind in cutting,” Mardiasmo said.
This delay has led to cautious optimism among home buyers, particularly evident in stagnant clearance rates around 60% in major cities.
Thomas McGlynn, CEO of BresicWhitney, advises sellers to adjust their expectations to meet current market conditions.
“Sellers who are willing to listen to the market and listen to buyer feedback will be rewarded with sales,” McGlynn told Domain.
He also highlighted the cautious yet ready pool of home buyers, emphasizing their reluctance to pay above market value.
Jarrod McCabe from Wakelin Property Advisory predicted that Melbourne would remain a buyer’s market until interest rates drop.
McCabe pointed to the high costs associated with maintaining properties and rising interest rates as key factors driving an increase in market listings. This influx is expected to provide home buyers with various options, maintaining downward pressure on property prices.
McCabe also cautioned that even with potential rate cuts, the impact might not be immediate, Domain reported.
In summary, as 2025 begins, the Australian property market is expected to favour home buyers, with the possibility of enhanced buying opportunities if interest rates are adjusted downwards.
Both buyers and sellers must navigate the market with realistic expectations and a strategic approach to capitalising on the prevailing economic conditions.
Read the Domain report here.
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