1. Interest rates: A cut may be coming
After holding steady throughout 2024, interest rates are poised for potential cuts, with some economists predicting reductions as early as February or May, depending on inflation and economic conditions.
Lower borrowing costs could make home loans more affordable, encouraging increased activity in the property market. However, rising demand could eventually push prices higher later in the year. Keeping an eye on Reserve Bank of Australia decisions will be crucial for buyers looking to secure favourable loan terms before the market responds to this increased activity.
2. Rising rents driving buyers into the market
Australia’s rental market remains tight, with national vacancy rates at a low 1.8%, according to CoreLogic’s November report. As rents continue to climb, many tenants are reconsidering their long-term strategies, finding that buying a home could offer greater stability and, in some cases, lower monthly costs compared to renting.
This trend underscores the importance of acting decisively if buying is part of your 2025 plans, as more renters transitioning to homeownership may increase competition in the housing market.
3. Reduced migration and its impact on housing demand
The government has lowered the 2025 permanent Migration Program cap to 185,000 for 2024–25, down from 190,000 the previous year. This change is expected to ease housing demand.
Tim Lawless, CoreLogic’s Head of Research, noted, “A further reduction in overseas migration will see less aggregate housing demand, especially across the rental sector where rental growth is already flattening out.” Over time, reduced migration could also lower demand for home purchases, potentially creating a less competitive market in some areas.
For buyers, this could mean greater opportunities in regions previously dominated by high rental demand or competitive first-home buyer markets.