Inside Real Estate – 5 February 2025: 2025 Property Market Trends

Welcome back to 2025! I hope you feel as refreshed and energised as I do to tackle the year ahead. I think most of us would agree that 2025 is already shaping up to be another year of change and challenges for us all, influenced by both local and global forces.

From potential interest rate cuts to housing affordability challenges, climate change and the impact of this year’s Australian federal election, now is a pivotal time for leaders, agents and our clients.

To help navigate what’s ahead, I’m pleased to announce my brand-new podcast Behind the Numbers – Property Wrap. I’ll be speaking with property experts to help us cut through the information overload and get to the core of various issues impacting our industry.

In the first episode (available here) I had the privilege of speaking with economist Nerida Conisbee, and below is an outline of the key takeaways she shared with me.

Interest Rate Cuts Are on the Horizon

With inflation figures moderating, the Reserve Bank of Australia (RBA) is under pressure to reduce interest rates. Markets are being priced assuming a 75% chance of a rate cut in February, with the possibility of up to four cuts this year. As Nerida pointed out, “Sydney and Melbourne are the cities that have historically seen the quickest and most significant price increases following a rate cut.”

Rate cuts could provide much-needed relief for buyers and investors, but they also highlight the importance of understanding how different markets respond. Agents should be prepared for increased activity and the need to guide clients on their timing effectively.

Housing Affordability and Supply Remain Front and Centre

Affordability continues to dominate the property landscape. While interest rate cuts may ease borrowing costs, the federal government’s target of building 1.2 million homes faces hurdles such as labour shortages, construction costs, and funding gaps. As Nerida emphasised, “If we build enough homes, particularly where people want to live, it does lead to more affordable housing.”

As affordability remains a central election issue, we must be ready to address client concerns about access to housing while highlighting alternative solutions like regional properties or government incentives.

The Federal Election’s Role in Shaping Property Policies

With the upcoming federal election, housing affordability and sustainability are key voter priorities. Policies addressing tax reforms, planning regulations, and green energy initiatives could significantly impact the property market. The election outcome will influence funding for housing supply and affordability programs.

It’s vital that agents stay informed about policy proposals from all parties and be ready to interpret how these changes may affect market conditions, from taxation to housing grants. This enables agents to position themselves as trusted advisors who understand both market dynamics and policy implications.

Climate Change and Sustainability Are Now Mainstream Issues

Natural disasters like bushfires and floods are reshaping property decisions. Sustainable and climate-resilient properties are becoming more desirable as buyers prioritise long-term value. Nerida noted, “Natural disasters initially lead to a drop in prices, but they generally recover within 12 to 24 months, depending on factors like insurance and government response.”

Climate-conscious buyers are seeking properties with energy-efficient features and in resilient locations. Highlighting these aspects can differentiate your listings and position you as an agent who’s ahead of the curve.

Regional Markets Are Stepping into the Spotlight

While Melbourne and Sydney continue to dominate, regional areas like southeast Queensland are gaining traction. Migration trends and lifestyle preferences are driving demand in these markets. Nerida highlighted, “The arc from Byron Bay to Brisbane is a major opportunity, with strong migration and long-term potential.”Expanding your focus to regional areas can open up new opportunities for growth and diversification. Agents should be ready to showcase the lifestyle and affordability benefits of these locations.

The intersection of interest rates, government policy, climate change, and affordability makes this a year of both challenges and opportunities.

As an industry, we’re well equipped to adapt to changing conditions, but the key to success lies in our confidence and clarity of information. Staying informed and proactive will allow you to guide your clients effectively and establish yourself as a ‘go-to’ leader in the industry.

For a deeper dive into these topics, you can listen to the latest podcast here. New episodes will be released monthly, so I invite you to also subscribe to ensure you’re the first to know when new content is available.

Until next time,
Stay connected.