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Market players continue to weigh in on what the year ahead will look like in Australia's housing market. With so many different variables – rate cuts, inflation, rising housing prices, a housing shortage, an election year and continued geopolitical tensions abroad — comes uncertainty, and differing opinions.
Home prices are expected to rise, but only in some of Australia's major cities. Meanwhile, opinions vary on when the RBA's next rate cut will be. There's also an upcoming election both domestically and abroad.
Australian Broker caught up with key players in the market to hear their thoughts on the year ahead. In a two-part series, AB asked some of the nation's top brokers and lenders what they're expecting and how they're preparing for 2025. But just as Australia's housing market is diverse, so are expectations for the future. Continuing with lenders, here's what a few had to say.
Sydney-based managing director at Blue Crane Capital (pictured above left)
"I'm cautiously optimistic about 2025. There's still a bit to play out with the commercial and land values,” Hall said. “Non-banks have helped keep these at an elevated level a little longer than expected. We should also see some resetting and adjustments on sites. I do think rates will come down [around] mid year, which will ease the challenges households are experiencing. This will, in turn, see the market improve. Also, apartments should improve in Sydney. The gap between units and housing has never been so large. Naturally, this will close soon with buyers priced out of housing and concentrating on units and townhouses."
Sydney-based general manager, mortgages and commercial lending, at non-bank lender Pepper Money
"We're very optimistic about the future. We've seen, in our last quarter, some significant growth. We expect growth to continue for both Pepper Money and non-banks, and that's driven by the competitive nature of our solutions and products with more innovation that's coming through that's allowing us to grow more market share.
"And there's expected to be a number of rate cuts next year," Saoud continued. "Whenever you get a rate cut, it will always stimulate the economy, and you will get more and more different consumers or borrowers looking at their different financial needs. So I expect with another interest rate cut there will be more activity of borrowers seeking credit, but also looking to buy a home. It's only good for consumers and good for the economy; I think it's a welcome relief for Australian homebuyers.
"Brokers have an excellent opportunity to proactively reach out to clients to help them reassess their financial priorities and implement positive changes that can lead to long-term financial stability in the new year," he said.
Melbourne-based group executive of origination at non-bank lender Pallas Capital
"I have a positive outlook. I think the market will resettle and there's some optimism approaching in terms of a decrease in rates next year,” Arnold said. “And there's an underlying demand for property. There's still demand out there for purchasers to buy apartments, townhouses or houses. We just need a bit of relief on the interest rates to help purchasers increase their borrowing capacity to pay the right prices for developments to make that feasible. In terms of lending, I can't see the banks' appetite changing all that much, if at all. So the non-bank market is still going to be really prevalent."
Perth-based founder and managing director of real estate investment firm Momentum Wealth
"We're anticipating solid growth in 2025, but it won't be to the same extent as 2024,” Collins said. “In Western Australia, we're anticipating 9% to 11% growth rate over the next 12 months. There's still a housing shortage and Perth has a solid economy and strong population growth."
Melbourne-based director, head of sales and distribution at non-bank lender Brighten
"From what we're hearing, we do expect the rates to drop next year, hopefully in Q1 or Q2. That's the biggest thing that will drive confidence in the market,” Meaker said. “And that confidence means customers might want to buy an investment property, or a bigger house, or to do construction. So we think next year is going to be bigger for us. And we're looking to take on more business development managers, because we expect to see some significant growth next year, especially, in the construction side of the business and in investment properties. [Customers] might not be able to borrow as much as they can from a bank. So they've come to us because we're able to lend more money because we've got a better borrowing capacity."
Chief Commercial Officer at Heartland Bank Australia (pictured above right)
"The market will continue to be strong in Australia, from a property perspective,” Cicak said. “However, I don't believe that we will see changes in the OCR as soon as we've hoped, and I think that will shock quite a few families and there will be a bit more conversation around maintaining these repayments and higher interest rates than originally thought to have had. So I think we have a bit more to overcome before we get to our normal standard."
Sydney-based co-founder and chief executive officer of non-bank lender Bridgit
"I have two predictions: One, interest rates will be coming down this year, hopefully soon, in February. That will take a lot of pressure off for Australians and that will stimulate the economy and there will be much more activity in the property market when rates start coming down,” Bassin said. “Some people have been waiting for a long time. And the second one is, artificial intelligence is taking over every industry globally. And lending is a huge opportunity for artificial intelligence to go into, to augment the user experience, to provide a lot more efficiency and scale, risk measures, when it comes to financial services and lending. So I think the adoption of AI will continue to increase across the Australian market."
