Buyer confidence is strengthening nationwide as anticipation builds for at least one interest rate cut in the first half of 2025.
The latest Mortgage Choice Home Loan Report, released this week, indicates that the current interest-rate environment is boosting buyer confidence.
Mortgage Choice Chief Executive Anthony Waldron stated that this renewed optimism is expected to drive increased demand and price growth nationwide throughout 2025.
“As speculation grows that home loan interest rates could begin to decline in the first half of 2025, prospective buyers are feeling more secure in their purchase plans,” Mr. Waldron said.
The report found that nearly a quarter (23%) of those planning to buy this year attribute their confidence to current interest rates, a notable increase from 17% in the September quarter.
Market Anticipates Interest Rate Cut
Money markets strongly anticipate that the Reserve Bank of Australia (RBA) will lower interest rates next week after 14 months, with a 93% probability priced in ahead of the February 18 decision.
Assuming a current mortgage rate of 6.26%, REA Group Executive Manager of Economics Angus Moore noted that a 0.25% rate cut could reduce repayments on a $500,000 mortgage by approximately $972 per year.
Strongest Buyer Confidence in WA and QLD
The report highlights that prospective buyers in Queensland and Western Australia are currently the most confident in the country.
Despite persistently high interest rates, both states have experienced strong market growth. The January 2025 PropTrack Home Price Index revealed that Western Australia recorded a 13.4% increase in home prices over the past year, reaching a median of $561,000. Meanwhile, Queensland’s median home price rose by 9.3% to $715,000.
“Both the Western Australian and Queensland property markets remain highly attractive,” Mr. Waldron said. “Given that national home prices have surged over 46% in the past five years, it’s no surprise that Australians remain eager to own property.”
More Australians Buying Alone and Investing
The report also revealed a rise in the number of Australians looking to purchase property independently. In the December 2024 quarter, 40% of prospective buyers planned to buy a home on their own, up 3% from the previous quarter.
Investment properties emerged as the primary motivation for buyers, with 39% of the 1,000 surveyed consumers citing investment as their reason for purchasing. The second most common reason was the need for a larger home, identified by 28% of respondents.
Data from Mortgage Choice shows investment loan values increased throughout the December quarter, rising nearly 24% year-on-year. Investor demand outpaced that of owner-occupiers, with Western Australia and Queensland once again leading the charge.
“Both states continue to attract investors due to strong population growth, relatively affordable property prices compared to Sydney and Melbourne, high rental yields, and low vacancy rates,” Mr. Waldron said. “Owning a home has long been the great Australian dream, and despite market challenges, our survey shows that Australians still view property ownership as a key path to building wealth.”
