Contrary to the typical market downturn expected with rising interest rates, the Australian housing market has shown remarkable resilience, PropTrack reported.
Since the start of interest rate increases in 2022, the majority of suburbs across the nation have reported growth in home prices.
Following the latest consumer price index (CPI) report, which showed a year-on-year rise of 2.4% in December, down from 2.8% in September, speculation about the Reserve Bank of Australia's (RBA) next move has intensified.
In response to this data, NAB has revised its expectations, now anticipating a 25-basis-point rate cut at the RBA's February 17-18 meeting, aligning with similar forecasts from Commonwealth, ANZ, and Westpac.
“These results are within the Reserve Bank of Australia’s (RBA) inflation target of 2% to 3%, leading to widespread speculation that the RBA might cut rates under such conditions,” said Karen Dellow (pictured above), senior data analyst at REA Group.
With financial markets predicting a 95% chance of a rate cut to 4.1% at the upcoming RBA meeting, the news might be a relief for variable rate mortgage holders who have faced increased payments since May 2022, causing significant financial strain for many.
Despite the economic pressure of high interest rates in recent years, home prices in most Australian suburbs have risen above their levels prior to the first rate hike.
By the end of 2024, median house prices in almost 80% of suburbs were higher than they were before rates began to climb in May 2022, with unit prices in 68% of suburbs also on the rise.
“Thus, while mortgage holders have been paying more monthly, their home equity has continued to grow,” Dellow said.
In terms of regional growth, 100% of suburbs in Greater Perth and Regional WA reported increases in median house prices. Close behind were Brisbane, Regional Queensland, and Regional SA.
However, Melbourne, Hobart, and Canberra had fewer suburbs showing positive growth, with only one in five Hobart suburbs increasing in value since May 2022.
As financial analysts anticipate the first RBA rate cut possibly in February, the market is poised for further changes. This potential cut could bolster the market, renewing confidence among buyers and sellers.
Dellow suggests that this could be an opportune moment for market participants, hinting at a possible surge in transactions.
