The property market is set to start 2025 in the same fashion as it ended last year, favoring buyers over sellers until there is a rate cut – if it materializes. Prices in Sydney rose by 2.3 percent and Melbourne fell (-3 percent) on CoreLogic data by the time 2024 came to a close.Credit: It was a culmination of higher rates since 2022 weighing on buyers’ capacity to borrow, as well as sellers listing their homes in droves.
Experts say more properties will hit the market this year, and price-sensitive, weary buyers will tip the balance in their favor. ANZ senior economist Adelaide Timbrell said rate cuts would be the major catalyst for the property market to pick up again.“ as long as we don’t see unemployment drop to those really low levels during that high inflation period and as long as inflation keeps going in that right direction,” she said. “These two should be enough for the RBA to cut in 2025,” she said. “Rate cuts and income growth will help with borrowing capacity, which supports an increase in housing prices.” Until then, she said affordability pressures would force larger household formation, a natural trend to cope with rising housing costs.“Affordability pressures will force a higher number of people homes, whether that’s younger people moving back in with parents due to affordability or people deciding to move from their own units to share houses,” Timbrell said.“The more people you squeeze into one home, the more spare homes there are for prospective renters or buyers.” PRD Real Estate chief economist Dr Diaswati Mardiasmo said Australia was heading in the direction of rate cuts as it was six months behind international peers such as the US, the UK and Canada, which have already begun cutting rates. “We were six months behind in increasing so we’re six months behind in cutting. Our inflation is much closer to the 2 to 3 percent benchmark that the RBA considers as a healthy target,” she said.“All the buyers are really holding out for tha