The Real Estate Institute of Australia (REIA) has expressed optimism regarding the current economic climate for prospective home buyers, driven by recent data on the Consumer Price Index (CPI) and supportive fiscal policies.
According to REIA, the CPI rose just 2.4% in the 12 months to February, a decline from previous months, signaling a move towards the Reserve Bank’s (RBA) target inflation range.
REIA president Leanne Pilkington (pictured) discussed the specific elements of the CPI.
“The annual movement for the monthly CPI excluding volatile items like fruit and vegetables, automotive fuel, and holiday travel and accommodation, rose 2.7% in February, down from the January figure of 2.9%,” Pilkington said.
She stressed that the key measure of annual trimmed mean inflation also showed a positive trend, increasing by 2.7% in February, a decrease from 2.8% in January.
Significant movements were recorded in essential living costs, with housing costs rising by 1.8%, while the cost of food and non-alcoholic beverages went up by 3.1%.
More notably, alcohol and tobacco surged by 6.7%.
The rental sector, however, saw a deceleration in price increases, with rents rising by 5.5% over the past year, the smallest annual increase since March 2023, which Pilkington indicated as reflecting increased vacancy rates across most capital cities.
“The figures support market expectations of further rate cuts during 2025 which would provide additional relief for borrowers following the cut in February and improve affordability,” Pilkington said.
This view is corroborated by recent data from Equifax, which showed a 4% increase in all mortgage demand following RBA’s rate cut, with a significant 24% rise in month-over-month mortgage applications. Refinance demand also grew, with a 12% year-on-year increase for the big for banks and a 25% increase for tier-2 lenders.
REIA’s analysis suggested that the combination of a favourable CPI trajectory and proactive budgetary measures are set to foster a more accessible and affordable housing market in Australia.
With expectations of further interest rate cuts and ongoing government support for housing investment, 2025 is shaping up as a promising year for Australians looking to enter the property market.
These developments underscored a potentially buoyant period ahead for real estate, bolstered by stable economic policies and improved market conditions.
