Sentiment set to boost demand and home prices this year
With at least one interest rate cut expected in the first half of 2025, confidence among homebuyers is strengthening across Australia, according to a new report.
The latest Mortgage Choice Home Loan Report, released this week, indicates that the current interest-rate environment is helping to restore buyer optimism.
Mortgage Choice chief executive Anthony Waldron (pictured) said this renewed sentiment is likely to drive stronger demand and home price growth across the country in 2025.
“As speculation mounts that home loan interest rates could start to fall in the first half of 2025, prospective buyers are feeling more confident about their purchase plans,” Waldron said.
According to the report, nearly a quarter (23%) of those planning to buy this year attributed their confidence to interest rates — up from 17% in the September quarter.
The prospect of lower interest rates is gaining traction in financial markets, with money markets pricing in a 93% chance that the Reserve Bank of Australia (RBA) will announce a rate cut next week.
If the central bank moves ahead with a 0.25% cut, repayments on a $500,000 mortgage at the current average rate of 6.26% could decrease by approximately $972 per year, according to REA Group executive manager of economics Angus Moore.
The Mortgage Choice report also found that buyers in Queensland and Western Australia were the most optimistic, with both states continuing to record solid market growth despite high interest rates.
The January 2025 PropTrack Home Price Index showed that Western Australia’s home prices had risen 13.4% over the past year to reach a median of $561,000, while Queensland’s median home price climbed 9.3% to $715,000.
“Both the Western Australian and Queensland property markets are proving attractive,” Waldron said. “When you consider that national home prices have risen over 46% over the last five years, it’s unsurprising that Australians hold such a strong desire to own property.”
The report also revealed a rise in the number of Australians planning to purchase a home on their own. In the December 2024 quarter, 40% of prospective buyers said they intended to buy solo — up from 37% in the previous quarter.
“Owning a home has long been the great Australian dream,” Waldron said. “Our survey shows Australians still see property as the key to building their wealth.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
