2024 in review and what to expect in 2025.

Can you believe the year is almost over? As 2024 wraps up, let's look back at the property market highlights and what we can anticipate for 2025.

Reflecting on 2024

Interest rates remained steady

The Reserve Bank of Australia (RBA) kept the cash rate steady at 4.35% throughout 2024. Although inflation has significantly decreased since its 2022 peak, underlying inflation remains a concern at 3.5%, still above the RBA’s target midpoint of 2.5%. The RBA doesn’t expect inflation to sustainably hit the target until 2026. This year also saw a major shake-up at the RBA, including fewer cash rate decisions and increased transparency in monetary policy processes.

Property prices continued to rise, but the market is cooling

Australia’s property prices continued to grow in 2024, but at a slower pace. November marked the 22nd consecutive month of growth, albeit modest at 0.1%. Perth led the way with a 21% year-on-year increase, followed by Adelaide (14%) and Brisbane (12.1%). Sydney saw a modest gain of 3.3%, while Melbourne experienced a decline of -2.3%. Prices remained relatively flat in Hobart (1%), Darwin (0.9%), and Canberra (-0.1%).

Rental growth slowed

After a period of rapid rental growth, the market cooled in many areas. Sydney, Melbourne, Brisbane, Perth, and Adelaide saw multi-year lows in annual rent increases for houses. Despite this, Sydney’s average weekly rent hit a record high of $775. Melbourne and Brisbane also experienced weak rental growth, while Darwin and Hobart saw their strongest September quarter since 2020 and 2017, respectively.

Government incentives announced

The May Federal Budget introduced several measures to help aspiring homeowners. The government allocated $5.5 billion for the shared equity Help to Buy Scheme, providing up to 40% equity for new homes and 30% for existing homes. Housing Australia received a $3 billion increase in its line of credit and a $2.5 billion liability cap boost. The Home Guarantee Scheme, part of the First Home Guarantee (FHBG), allows eligible homebuyers to purchase a home with a 5% deposit without paying Lenders Mortgage Insurance. Additional incentives included a $300 energy bill rebate and tax cuts to boost borrowing power.

What’s ahead in 2025

Potential interest rate drops

The RBA Board's first meeting in 2025 is set for February 17-18. Speculation is high that a cash rate cut might happen in the first half of the year, with one major bank predicting a cut in February and others forecasting a cut in May. The RBA has stated that any rate cuts depend on inflation data, with the December quarter data due at the end of January.

Property price growth may slow

Many economists predict a continued deceleration in property price growth in 2025. SQM Research’s Boom and Bust Report forecasts declines in Sydney and Melbourne, while Perth is expected to see the strongest growth. Nationally, housing prices are predicted to rise between 1% and 4%, assuming stable inflation, steady population growth, and a mid-year interest rate cut.

Federal election impacts

The 2025 Australian federal election is expected by May 17, with potential early elections on the horizon. The housing crisis will likely be a major issue, with election promises worth watching. The Coalition has proposed allowing first home buyers and separated women to use up to $50,000 of their superannuation for a home deposit.

Planning a 2025 property purchase?

With interest rates potentially dropping and property prices set to decline in some markets, 2025 looks promising for homebuyers and investors. Planning to buy? Get pre-approved on your finance. Book an appointment or call us at 1300 780 440. Let's make your property dreams a reality!