The bulls are rushing Australia’s property market.
The Reserve Bank of Australia (RBA) is forecast to cut the official cash rate by 1.0% by the end of 2025, taking it to 3.10%.
As illustrated below, the Albanese government recently instructed lenders to disregard student debts when assessing mortgage serviceability, which will lift borrowing capacity.
The Albanese government’s 5% deposit scheme for first home buyers will also commence on January 1, 2026, providing further stimulus to the market.
Stuart Wemyss of the ProSolution Private Clients Group believes the housing market may be artificially subdued over the second half of 2025 as an estimated 80,000 first home buyers wait on Labor’s scheme to come into effect.
“If you want to buy in the residential market, buy before this scheme kicks in, because house prices are going to rise when it commences”, he said.
However, Louis Christopher from SQM Research forecasts that property prices could jump by 8% to 15% next year, led by the hotly contested sub-$1 million.
“When this universal scheme is up and running, we may have already had several rate cuts come through from the RBA”, Christopher noted.
Investment analysts also told The Australian that funds could begin flowing out of superannuation accounts into residential property if the government’s plan to introduce a 15% tax on amounts above $3 million comes into effect.
The combination of falling interest rates and favourable policy changes looks set to ignite another house price boom.
Australian homes are already among the most expensive in the world, and Australian households are some of the most indebted.
Higher house prices and bigger mortgages are the last things the country needs.
