With the end of 2024 fast approaching, it’s time to look at the highlights reel of what happened in the property market this year and what’s in store for 2025.
Interest Rates Remained Steady
The Reserve Bank of Australia (RBA) maintained the cash rate at 4.35% throughout 2024.
Inflation has fallen substantially since the peak in 2022. Headline inflation was 2.8 per cent over the year to the September quarter, but underlying inflation (as represented by the trimmed mean) remains a concern for the RBA.
Over the year to the September quarter, it was 3.5 per cent, which means it’s still some way from the 2.5 per cent midpoint of the RBA’s inflation target. The RBA doesn’t expect inflation to return sustainably to the midpoint of the target until 2026.
2024 also saw structural changes at the RBA. Following recommendations from the 2023 Review of the Reserve Bank, the number of cash rate decisions was reduced to eight annually, with greater transparency introduced through post-meeting press conferences.
Property Market Trends
Property prices continued to rise but at a slower pace. November marked the 22nd consecutive month of growth, albeit modest at 0.1%.
Cooling Rental Market
After years of sharp increases, rental growth eased in many cities as demand softened. Shared housing, intergenerational living, and reduced overseas migration contributed to this slowdown.
Government Initiatives for Housing
The Federal Budget introduced several measures to support homeownership:
Interest Rates
The RBA’s first meeting of 2025, scheduled for February, may bring a cash rate cut. While only one of the big four banks predicts a February cut, others expect a reduction by May, contingent on inflation stabilising. All eyes will be on December quarter inflation data, which is due to be released at the end of January.
Property Prices
Economists anticipate further cooling in property price growth. Sydney and Melbourne are projected to see declines, while Perth is expected to remain strong. Nationally, prices may rise 1-4%, assuming stable inflation, steady population growth, and a mid-year rate cut.
Federal Election Implications
The federal election, due on or before 17 May 2025, could influence housing policy. The Coalition has already proposed allowing first-home buyers and separated women to access up to $50,000 of superannuation for home deposits.
Opportunities for Buyers
With potential interest rate cuts and softer property prices in some markets, 2025 could present opportunities for home buyers and investors. Securing pre-approval now can help position you to act quickly when the right property comes along.
