Australia’s property market is showing immediate signs of revival following the Reserve Bank’s second interest rate cut in just four months. The cash rate now sits at a two-year low of 3.85%, and the effect has been swift — spiking auction results, boosting buyer confidence, and inflating final sale prices across Sydney and beyond. Auctions that once attracted only two or three bidders are now seeing 15 to 25 buyers vying for a single home.
Rodney McLoughlin highlights that renewed buyer sentiment is tied not only to increased borrowing capacity but also to shifting market psychology. Rate cuts are signalling stability, and buyers — especially Baby Boomers and Millennials — are regaining confidence that now is a good time to purchase.
Demand Surges, but Affordability Challenges Remain
Finder.com.au’s latest polling confirms this shift: 36% of respondents now believe it’s a good time to buy, up sharply from just 25% in 2023. Loan volumes and sizes are also climbing. But while borrowing costs may ease, the deposit hurdle persists — and rising values only widen the gap for first-home buyers.
ABS data shows the average loan size is up 8.3% year-on-year, suggesting that while access to credit has improved, many buyers still struggle to keep up with the market’s pace.
Prices Forecast to Rise Further Through 2026
HSBC now predicts prices in Sydney and Melbourne will rise by up to 12% by the end of 2026. Brisbane and Perth are tipped to lead the nation, with forecasts suggesting growth of up to 10% next year alone. Rodney McLoughlin cautions that while buyers should be mindful of affordability pressures, those ready to act may find this a rare opportunity before another wave of price growth.
Advertising Costs and Supply Gaps Create Pressure
Amid the market surge, vendors face rising advertising costs from dominant platforms like REA Group, prompting an ACCC investigation into potential price gouging. Some agents are even opting to bypass traditional portals altogether to manage costs — a growing sign of stress in the sales process.
Meanwhile, Australia’s housing supply remains well behind national targets. At the current pace, the government may fall over 250,000 homes short of its 2029 goal. McLoughlin stresses that solving affordability will require not just monetary policy, but structural reforms to planning and zoning.
Real Estate Newsletter
This article is a curated summary of various news stories from the past week, offering insights and updates on the real estate market. 30 May 2025
Rodney McLoughlin is a trusted real estate professional with deep insights into the Australian property market. For personalized advice and market expertise, reach out to Rodney today.
