January 2025

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Final House Price Data for 2024: A Snapshot of Australia’s Property Market

As 2024 wraps up, CoreLogic has released its final data for the year, showing a mixed performance across Australia’s property market. While some cities experienced strong growth, others recorded declines due to affordability pressures and slowing demand. Here’s a breakdown of the performance in January 2025 and an outlook for the near future.

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January Price Changes

The first month of 2025 has seen a positive shift in the housing market, with price increases recorded across several major cities:

• Brisbane: Up by 0.3%.
• Adelaide: Up by 0.7%.
• Perth: Up by 0.4%.
• Melbourne: Down by -0.6%

Year-to-Date Performance

Comparison to Sydney

One of the most noteworthy trends is the relationship between the property markets in other cities and Sydney, which continues to set the benchmark for housing prices in Australia. As of December 2025:

• Brisbane is currently at 66.3% of Sydney’s price levels and is expected to reach 80% at the peak of the market cycle.
• Adelaide stands at 59.2% of Sydney’s prices, with an anticipated peak of 70%.
• Perth is at 57.2% of Sydney’s prices, also predicted to rise to 70% at the market cycle’s height.
• Melbourne is currently 62.2% of Sydney’s peak median and is anticipated to reach 89.8% at peak market

Melbourne is set to rise by a potential 10%, making it a city to watch for market recovery!

Rent Growth Outpacing Inflation

The final figures for January 2025 indicate that while housing markets in Brisbane, Adelaide, and Perth are catching up to Sydney’s prices, rental growth is showing signs of easing.

National rents rose 4.4% annually, still above the pre-COVID average of 2.0%.
Sydney and Melbourne recorded rental declines (-0.4% and -0.6%, respectively).
Regional rents outperformed capitals, increasing 1.6% over three months compared to 0.3% in capitals.

Conclusion: A Market in Transition

House prices continue to fluctuate as interest rates and economic conditions shape the market. While Brisbane, Adelaide, and Perth show strong growth, Melbourne and Sydney face affordability constraints. Rental conditions are easing, providing some relief for tenants.

Australia’s Interest Rate Forecast for 2025: Are Rate Cuts on the Horizon?

With interest rate cuts likely in 2025, borrowing capacity is expected to improve. Financial markets have priced in a 95% chance of a 0.25% rate cut in February, with further reductions expected throughout the year.

The cash rate is projected to fall to 3.35%-3.6% by year-end.
Reduced mortgage rates could stabilize the market and support housing demand.
Affordability remains a challenge despite potential rate cuts.

Potential Implications

Homeowners with variable mortgages may see lower repayments.
Housing demand could rise if borrowing power increases.
A gradual recovery is expected, but affordability constraints and population growth normalization could slow momentum.

Australia’s property market in 2025 is set for a period of modest growth and stability. While some regions continue to expand, others face headwinds from affordability constraints and tighter credit policies. Buyers and renters should stay informed as economic conditions evolve.

Australia’s Interest Rate Forecast for 2025: Are Rate Cuts on the Horizon?

As of early February 2025, Australia’s economic landscape is poised for potential shifts in interest rates, with major financial institutions and economic analysts closely monitoring key indicators to forecast the Reserve Bank of Australia’s (RBA) next moves.

Current Economic Indicators

Recent data from the Australian Bureau of Statistics indicates that the trimmed mean inflation rate decreased to 3.2% year-on-year in December, falling short of the RBA’s forecast of 3.4%. Headline inflation also declined to 2.4%, aligning within the central bank’s 2-3% target range. These figures suggest a moderation in inflationary pressures, primarily due to decreases in electricity and automotive fuel prices, as well as slower price increases for new dwellings.

Banks’ Projections

In response to these developments, Australia’s major banks have updated their interest rate forecasts:

National Australia Bank (NAB): NAB has revised its projection, now anticipating a 25 basis point rate cut by the RBA in February 2025. This adjustment is attributed to the quicker-than-expected moderation in inflation.

Commonwealth Bank (CBA): CBA maintains its prediction of a February rate cut, citing a 1.8% decline in household spending in December as a key factor influencing the RBA’s decision.

ANZ: ANZ has adjusted its forecast, now expecting an interest rate cut at the RBA’s meeting on February 18, 2025. This change is based on favorable inflation data from November.

Westpac: Westpac has also updated its rate cut prediction to February after better-than-expected inflation data.

Analysts’ Perspectives

Economists are divided on the timing of the anticipated rate cuts. Some caution that, despite easing inflation, core inflation remains above target, influenced by factors such as labor market conditions and potential international economic pressures. They advise that the RBA may opt to wait for further inflation data before deciding on additional rate cuts later in the year.

Conversely, other analysts argue that the current economic indicators provide sufficient justification for an immediate rate cut to support economic growth and alleviate financial pressures on households.

Potential Implications

If the RBA proceeds with a rate cut in February, homeowners with variable mortgages could see reductions in their monthly repayments, providing some financial relief. However, there is concern that lower interest rates might stimulate increased housing demand, potentially leading to a resurgence in property prices, particularly in major cities like Sydney and Melbourne.

Additionally, while a rate cut could boost consumer spending and economic activity, it may also pose risks if inflationary pressures re-emerge or if global economic conditions deteriorate.

Conclusion

As of now, the consensus among Australia’s major banks leans towards an imminent rate cut by the RBA, possibly as early as February 2025. However, the exact timing and magnitude of such a move will depend on forthcoming economic data and the RBA’s assessment of both domestic and international economic conditions. Stakeholders are advised to stay informed through official RBA communications and analyses from reputable financial institutions.