Buyers trying to crack into the housing market next year may get the chance to purchase before the next big jump in prices.
A new forecast has revealed that slowing home-price growth next year could create a window of opportunity for buyers to get into the market before anticipated rate cuts stimulate more housing demand.
Buyers with the means to purchase will be able to take advantage of an ongoing slowdown in the market next year, with the runaway price growth seen across much of the country over the past year finally easing.
Home prices are forecast to rise by between 1% and 4% at the national level, according to the PropTrack Property Market Outlook, released today.
That modest growth is slower than the 5.5% growth recorded so far this year, with the high number of homes on the market and affordability constraints keeping prices in check.
Most capital cities have been seeing new listing volumes trending higher throughout 2024 as vendor willingness to put properties up for sale has increased.
Sydney and Melbourne are currently seeing total listing volumes at highs not seen in more than a decade.
Assuming the higher volume of stock for sale persists, buyers will be afforded more choice when looking to purchase, likely reducing competition and urgency from buyers.
“In turn, this is likely to reduce upward pressure on prices.
How home prices are forecast to change around Australia
While property prices aren’t anticipated to fall in 2025, the double-digit price growth seen in some of the smaller capitals is likely to be over, according to the report.
Sydney prices are forecast to rise by 1-4%.
Rate cut delay dampens demand
A key factor in the limited price growth anticipated this year is the outlook for interest-rate cuts, which kept getting pushed further and further back throughout 2024.
Rate cut expectations are likely to shift over time, but it looks likely that interest rate cuts will occur later than expected with fewer overall cuts.
The RBA kept the cash rates on hold at 4.35% at its December board meeting, with most of the big banks now expecting the first rate cut to come in May next year. Interestingly, the total volume of engagement, such as listing saves, shares, photo views and property views on realestate.com.au, is higher than a year ago, which may indicate a lot of people still interested in purchasing but taking longer to make a purchase decision. The upcoming federal election, anticipated before the end of May, could further keep a lid on price growth early next year.
Housing activity typically slows in the lead-up [to an election]. So, this could contribute to a slower than normal housing market early in 2025.
However, demand is only expected to be contained for so long, with rate cuts potentially providing a catalyst for price growth.
We expect demand will continue to ease initially in 2025 however, once interest rates start to fall and borrowing capacities increase, we anticipate a lift in demand.
Another factor supporting price growth was the equity that many homeowners have built up in their properties as a result of the huge price increases recorded in most markets over the past few years.
Over the five years to October 2024, national dwelling prices have increased by 47.9%, however, there are substantial geographic variations in this data.
Daniel Butkovich, Property Journalist
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