The Australian property market saw renewed activity in February, buoyed by an RBA rate cut and robust regional market demand, according to Herron Todd White’s February Residential Market Review.
According to Kevin Brogan (pictured), national director of group risk and compliance at Herron Todd White, the Australian residential property market typically exhibits a seasonal cycle. Activity peaks before Christmas and slows in January.
This year, the market has rebounded strongly post-summer, with increased auctions and firming clearance rates across most capitals. Property listings have risen, though from a low base.
The Reserve Bank’s decision to lower the cash rate by 25 basis points in February came as a response to an underlying inflation rate of 3.2%—below expectations—and a consumer price index at 2.4%, aligning with the target range.
The rate cut is expected to invigorate the market, with Westpac forecasting a modest 3% price increase, spurred by this and potential future reductions.
Regional markets are showing exceptional resilience, benefiting from affordability and the ongoing preference for flexible working arrangements, which support demand for residential spaces outside urban centers. This demand, coupled with a slower supply response, is bolstering price growth in these areas.
Despite global economic uncertainties, such as fluctuating tariff regimes that could impact market conditions, the local property market’s strength is notably influenced by internal factors, particularly in specific states.
For instance, in Western Australia, residential market fortunes remain closely linked to the mining industry’s performance.
In Victoria, property taxes have a pronounced impact on the market dynamics.
The imposition of land taxes, particularly on discretionary markets like second homes and investment properties, is prompting sales and placing downward pressure on prices, especially in high-value coastal areas.
While this may deter new investors, it potentially benefits first-time home buyers through reduced competition at lower price levels, Brogan said.
