Should You Buy Now or Wait for Further Rate Cuts in 2025?
If you’ve been keeping an eye on the Australian property market, you may have heard that many economists believe the Reserve Bank of Australia (RBA) will cut interest rates further in 2025. So, the big question is: should you buy now, or hold off for potential rate cuts in the near future?
While the idea of lower rates sounds appealing, it’s important to remember that property purchases are long-term investments. Let’s take a closer look at the market’s performance and how you should approach this decision.
The Australian Property Market: A Look at the Data
Looking at long-term data can offer some insights. Over the past decade to January 2024, Australia’s median property price rose by a significant 80.1%, according to PropTrack. However, growth has varied across different regions:
- Combined regions saw a price increase of 92.5%.
- Combined capital cities experienced a lower increase at 75.7%.
- Houses had higher growth compared to units (89.4% vs 44.4%).
Despite the differences, the general trend is clear — property prices have been on the rise. This historical growth suggests that, over time, properties tend to appreciate in value, even in the face of market fluctuations.
Nicola Powell’s Take: Long-Term Investment Is Key
Domain’s Chief of Research & Economics, Nicola Powell, advises first home buyers to take a long-term view when considering a property purchase. She believes it’s not wise to focus too much on the short-term movements in the market.
“When you’re purchasing a property, it’s for the long-term. You’re going to experience multiple property cycles, and that’s how wealth is built. My advice would be to buy when it’s the right time for you,” Powell says. “The housing market is complex and often impossible to predict.”
Should You Buy Now or Wait?
Ultimately, whether you should buy now or wait for a potential rate cut depends on your individual circumstances and goals. With a rate cut already in place, interest rates are lower than before, making home loans more affordable in the short term. However, there’s still uncertainty about how much further rates will drop — and what impact that could have on property prices.
Factors to consider:
- Your personal finances: Do you have your deposit saved up? Are you comfortable with your current financial situation, including your ability to make regular repayments?
- Your long-term plans: Are you looking for a home to settle in long-term, or is this more of a stepping-stone property? A long-term commitment can help you ride out market fluctuations.
- Market conditions: While price growth has slowed in some areas, demand in capital cities is still high. This means that waiting for rates to drop further might not always lead to a better deal if prices continue to rise in the meantime.
It’s About Timing for You, Not the Market
The right time to buy is when you feel financially ready and confident in your decision. If you’re in a strong position to purchase now, locking in a home loan at a lower rate can be a smart move. If you’re unsure, it’s worth taking some time to assess your finances and goals.
Need Help Deciding? We Can Crunch the Numbers for You
Buying your first home is a big decision, and you don’t need to make it alone. If you’d like help understanding how a recent rate cut could affect your situation, I’d be happy to chat with you and crunch the numbers. Together, we can explore personalised loan options that suit your unique needs.
Whether you decide to buy now or wait, the most important thing is making an informed decision that aligns with your financial goals.
Have questions? We’re here to help. Schedule a call with us today to get the advice you need and take the next step toward homeownership.
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