Property Market Update – May 2025

The Reserve Bank of Australia (RBA) kept the cash rate on hold at its latest meeting, but it looks highly likely the RBA’s next move will be a cash rate cut after President Donald Trump’s sweeping tariffs on US imports sent shock waves through global markets.

Meanwhile, the federal election has been called for 3 May and both major parties have put their housing policy cards on the table.

Property prices are on the rise in almost all capital cities, so if you’re planning an autumn property purchase, talk to us about getting pre-approved on your finance sooner rather than later.

Interest rate news

At its second meeting for 2025, the RBA kept the cash rate on hold at 4.1 per cent.

The latest figures from the Australian Bureau of Statistics showed headline inflation slowed to 2.4 per cent over the 12 months to February – well within the RBA’s target band and down from 2.5 per cent in January. Underlying inflation (as represented by the trimmed mean) was 2.7 per cent, down slightly from 2.8 per cent in January.

However, on 2 April, the Trump administration announced sweeping tariffs on US imports, causing stock markets to plunge and prompting predictions of a US recession and rapid interest rate cuts.

Financial markets have since priced in that an RBA cash rate cut in May is expected, and at least four in total throughout the year. That would bring the RBA’s cash rate down below 3 per cent by the end of the year.

There’s even speculation of a 50 basis point cut – a double rate cut – in May.

With so much interest rate movement on the horizon, it’s crucial to review your home loan early and understand how it compares to others. To explore your options, get in touch today.

Home value movements

Property values across the nation swelled in March, with CoreLogic recording a 0.4% rise in values.

Every capital city except Hobart recorded a positive change. Regional areas also saw prices on the rise (up 0.5% across March).

“Improved sentiment following the February rate cut is likely the biggest driver of the turnaround in values, along with the cut’s direct influence of a slight improvement in borrowing capacity and mortgage serviceability,” CoreLogic research director Tim Lawless said.

“With the rate-cutting cycle expected to be drawn out, it will be interesting to see if this positive inflection in values can last in the face of affordability constraints.”

All dwellings – Auctions – Clearance Rate – Private Sale – Monthly home values change

• VIC: 1253 – 66% – 1617 – ▲ 0.5%

• NSW: 1339 – 55% – 2038 – ▲ 0.3%

• ACT: 100 – 63% – 129 – ▲ 0.2%

• QLD: 264 – 44% – 1243 – ▲ 0.4%

• WA: 12 – 8% – 742 – ▲ 0.2%

• NT: 7 – 100% – 34 – ▲ 1.0%

• TAS: 5 – 20% – 201 – ▼ –0.4%

• SA: 138 – 72% – 368 – ▲ 0.8%

*Monthly Home Values figures as of 28 February 2025
*Australian auction results, clearance rates and recent sales for the week ending 9 March 2025
*The clearance rate is preliminary and current as of 11:30pm AEDT, 12 March 2025

Election news and promises

With the election called for 3 May, current and aspiring homeowners will no doubt be eager to hear what the major parties are promising.

The Coalition has vowed to:

• Allow first home buyers of newly built homes to deduct part of the interest paid on their mortgage from their income taxes (first $650,000 of their home loan only, five-year limit).

• Abolish Labor’s $10 billion Housing Australia Future Fund.

• Reduce permanent migration.

• Implement a two-year ban on foreign investors and temporary residents purchasing existing homes.

• Cap foreign student numbers.

• Allocate $5 billion towards infrastructure around housing estates.

• Allow Australians to access $50,000 out of super to buy their first home (to be returned upon sale).

• Get APRA to relax loan approval rules to help first home buyers.

• Freeze changes to the National Construction Code for 10 years.

The Labor government, if re-elected, would:

• Expand its existing scheme to allow all first home buyers to purchase with a 5% deposit, avoiding LMI.

• Commit $10 billion to build 100,000 homes exclusively for first homebuyers.

• Introduce a $1,000 instant deduction from 2026–27.

• Match the Coalition’s two-year foreign buyer ban.

• Expand the Help to Buy program, offering up to 40% equity contributions.

• Raise price and income caps (to $100,000 for singles, $160,000 for couples/single parents).

• Allocate $54 million for prefabricated and modular housing to boost supply.

• Continue rolling out funds from the Housing Australia Future Fund for social and affordable housing.

Broad-based cost-of-living relief measures include:

• New tax cuts

• More energy bill relief

• Initiatives to reduce the cost of medicines and student debt

Ready to buy?

Whether you’re looking to purchase your first home, next home, an investment property or you want to refinance, we can assist.

Please contact us for assistance.