The One That Got Away…
Have no PROPERTY regrets!
As interest rates are anticipated to decline in 2025, many potential home buyers might find themselves regretting their decision to wait.
With a pre-spring influx of new listings in Australia’s capital cities[1], now could be the ideal time to enter the property market.
The housing upturn has been rising for 18 months in a row with home prices hitting fresh record highs in many markets[2]. And although there are always uncertainties and risks ahead, there are strong indicators that our housing market will remain strong.
Why?
Increased property listings
Recent data indicates that new property listings in Australian capital cities have surged to their highest levels in over a decade1.
This increase provides buyers with several advantages:
- More choices: An abundance of listings means buyers can explore a wider variety of properties, catering to diverse preferences and budgets.
- Reduced competition: With more options available, competition among buyers tends to decrease, allowing for more negotiation power.
- Slower price growth: A larger supply of homes generally leads to a deceleration in price increases, making it easier for buyers to secure properties without facing bidding wars.
According to PropTrack’s Director of Economic Research Cameron Kusher, the expected interest rate cuts in 2025 could further boost buyer confidence. He notes that interest rate reductions often precede home price growth as buyers feel more financially secure and willing to invest in property.
The impact of interest rates
Interest rates have a profound influence on the property market. As rates rise, borrowing costs increase and can deter potential buyers.
However, as we approach 2025, predictions suggest that rates will begin to fall and potentially lead to a resurgence in buyer activity.
KPMG forecasts that national house and unit prices will continue to rise throughout the year[3]. This anticipated growth underscores the importance of acting before prices escalate further.
When The Reserve Bank of Australia (RBA) finally cuts interest rates, this could enhance the borrowing capacity of many buyers. This scenario creates a sense of urgency for those currently on the fence about purchasing property. Kusher advises that waiting too long could lead to regret as prices rise and opportunities diminish.
Market dynamics and buyer sentiment
The current real estate landscape is characterised by mixed performance across different capital cities. While some areas such as Brisbane and Perth are experiencing significant price increases due to strong demand and limited supply, other cities are witnessing slower growth[4]. This variability presents unique opportunities for buyers depending on their target locations.
Important note:
Slower growth in property prices does not necessarily indicate a decline. Rather, it signifies a more tempered pace of appreciation.
As we have seen in previous markets, the phenomenon of ‘fear of missing out’ (FOMO) is likely to intensify as buyers become aware of rising prices and improved market conditions.
Even with slower growth, property values can still increase.
For instance, as national house prices are predicted to rise, despite a cooling market, this indicates that while the rate of growth may be less aggressive than in previous years, it does not mean that prices will fall4.
We have seen this so many times in previous property cycles. And those who have delayed their purchase have often found themselves wishing they had acted sooner.
Several economic factors contribute to the current property market dynamics:
- Population growth
Australia’s population continues to grow at a robust pace, creating sustained demand for housing amidst limited supply.
- Rental pressures
Rising rental prices due to low vacancy rates further compel potential buyers to consider home ownership as a more viable option.
- Consumer confidence
As interest rates stabilise and economic conditions improve, consumer sentiment is expected to rebound, encouraging more people to enter the market.
With careful consideration and strategic research, entering the property market now may yield significant benefits for future homeowners.
On a final note…
Purchasing property should always begin with a thorough assessment of your financial capacity. Your personal finance team is ready to support your property purchase goals. Feel free to reach out.
[1] https://www.realestate.com.au/news/wouldnt-hesitate-whats-behind-the-biggest-pre-spring-city-real-estate-rush-in-over-a-decade/
[2] https://propertyupdate.com.au/australian-property-market-predictions/
[3] https://kpmg.com/au/en/home/insights/2024/06/residential-property-market-outlook.html
[4] https://www.domain.com.au/news/australias-2024-property-market-prices-slow-across-australia-except-in-brisbane-and-perth-1304621/
Disclaimer: This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether the information is appropriate for your circumstances. Your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. ©2024