Will 2025 be the year to purchase your dream home?

While no one has a crystal ball, our Managing Director Don Crellin shares his thoughts on what could be coming for the property market in 2025

1. General market conditions
2025 is shaping up to be a much more active market for both buyers and sellers. Falling interest rates will ease borrowing costs, while confidence is returning even in markets that have been incredibly tight. In some states, low stock levels will ensure sellers achieve great deals, while in others, higher stock levels are creating more opportunities for buyers.

More properties will enter the market as sellers regain confidence that there are also great options for them to buy. This increase in supply is giving buyers greater choice and reducing some of the competitive pressure seen in recent years.

Cost-of-living pressures, which have weighed heavily on household budgets, are set to ease as inflation continues to stabilise. This shift will provide much-needed relief, making it easier for potential buyers to save for deposits.

Government support remains a cornerstone of market accessibility. Federal initiatives like the Housing Australia schemes, combined with state-specific incentives such as stamp duty reforms and grants, are creating a more supportive environment for first home buyers, upgraders, and investors alike. The potential rollout of new programs, such as the Help to Buy shared equity scheme, could further bolster opportunities.

In addition, lenders are expected to ramp up competition in a bid to attract new borrowers, offering lower rates and innovative products that benefit buyers. This heightened competition will give buyers more negotiating power and access to better deals.

Tight budgets are driving more first home buyers towards apartments, where demand is rising fast. The price gap between apartments and houses is narrowing, making apartments a more attractive entry point.

For those looking to enter the market or upgrade, 2025 presents a unique opportunity. With falling rates, growing housing stock, easing financial pressures, and ongoing government assistance, the market conditions are aligning to create an environment where buyers can make their move with greater confidence and flexibility.

2. Interest Rates
Interest rates are heading south, with cuts anticipated between February and mid-year as the Reserve Bank moves toward sustainable inflation targets. Economists are divided on timing, but the trajectory is clear, lower rates are coming.

We expect the bottom of the rate cycle to be in the vicinity of 3% and by late 2025, variable home loan rates are expected to drop from the around 6.8% to around 5.75%, providing significant relief to borrowers, and making homeownership more accessible.

Fixed rates are already on the decline, with an average reduction of 10% throughout 2024. However, in a falling-rate environment, fixed rates aren’t the ‘go to’ for borrowers. Currently, only 2 to 3% of homeowners are opting for fixed rates. That said, short-term fixed rates could gain traction in 2025 if lenders adopt aggressive pricing strategies. Borrowers may be tempted by fixed rates priced below current variable rates as a way to lock in short-term savings before further cuts take effect.

The message for homeowners and buyers is clear: keep a close eye on the market. Whether variable or fixed, falling rates will create opportunities to save—talk to your mortgage broker to ensure you’re making the most of these changes.

3. Investors
Low vacancy rates are maintaining strong rental demand across the country, making property investment an attractive option for those seeking steady rental income. This tight rental market continues to deliver solid returns for investors, even as capital growth moderates in some regions.

Capital growth opportunities remain a key driver in some markets like Perth and Adelaide, where property prices are still climbing. These areas are attracting investors looking for long-term gains and rental yields in stable and growing markets.

In Western Australia, interstate investor activity is slowing as investors shift their focus to other states, like Victoria and New South Wales, where they anticipate the next growth cycle. However, this has created an opening for local investors, who are stepping up to seize opportunities within their own market.

For local WA investors, increasing stock levels and moderating price growth are providing better entry points, particularly for those targeting established homes or apartments. With builders returning to normal timelines and costs stabilising, there’s also renewed interest in new builds.

Overall, the fundamentals remain strong for investors: tight rental markets, stable growth in select regions, and opportunities to leverage falling interest rates for competitive financing.

4. First Home Buyers
Never has there been more support for first home buyers, making it an exciting time to enter the property market. From federal initiatives like the Housing Australia schemes to targeted state-based incentives, the range of options is broader than ever.

Key programs like the First Home Guarantee are helping buyers with smaller deposits secure loans without the need for mortgage insurance, opening doors for many who might have otherwise struggled to enter the market.

The upcoming Help to Buy scheme, now backed by Senate approval, offers a shared equity model to help eligible buyers partner with the government in purchasing a home. This program could significantly reduce the financial burden for first home buyers and is shaping up to be a game-changer.

State-based incentives, such as stamp duty relief or grants for first-time buyers, are also playing a significant role. For example, some states offer reduced or no stamp duty for first home buyers purchasing homes under a certain price threshold, helping reduce upfront costs.

The challenge is awareness. Many first home buyers aren’t fully informed about the opportunities available to them. Complex eligibility criteria, varying state policies, and the sheer number of programs can make navigating the landscape overwhelming. This is where engaging a mortgage broker becomes invaluable. With the right support, first home buyers can unlock the full potential of these programs and step confidently into the property market.

To find out how your borrowing power may change in 2025, contact your local Resolve mortgage broker.