Market Report
Property Market Report: February 2025
5 March 2025
by Dee Pajevikj
It isn’t even so much the size of the rate cut as much as it is the fact the tide has turned. A 25 basis point reduction in the cash rate won’t change anyone’s life, or address. But those of us who’ve studied the DNA of the RBA over many years know that it’s like an elephant, it turns slowly, and when it reverses direction it does so painfully, deliberately, and isn’t intending to about-face again any time soon. If more interest rate cuts are to come – the market will enter in a period of cheaper money. This, both historically and logically, could lead to property value increases, particularly in the premium segments of the market.
CoreLogic’s recent analysis suggests that Melbourne’s luxury housing sector will experience a notable uptick in values because of the rate cut, and the accompanying realisation that, at last, we have passed the bottom of the cycle.
The Federal Government recently legislated a hiatus on foreign investors purchasing established dwellings for two years, starting April 1, 2025. This decision is intended to alleviate pressure on housing demand and improve affordability for local buyers. While this policy may reduce competition from foreign buyers in Melbourne’s luxury market, its overall impact on price will be limited (certainly not enough to offset interest rate cuts) as foreign investment constitutes a small fraction of the market.
Given the ban, foreign investors are likely to refocus toward new housing, thus easing Australia’s housing shortage. More particularly, industry experts are predicting foreign capital to be redirected toward luxury apartment projects. Money coming from China tends to be mystified by the California Bungalow. In short, foreign capital will redirect toward new, high-end projects, thus boosting the supply of premium properties in Melbourne.
Housing affordability and availability has become a major issue in the looming federal election, and both Labor and the Coalition are promising to ease affordability and increase availability through long-term supply initiatives. But whatever strategies the next government adopts will, if history is any guide, be targeting entry-level home buyers and therefore are unlikely to have a great impact on the good citizens of Stonnington and other similarly handsome neighbourhoods in which Abercrombys operates.
Prices softened in Melbourne during 2024, but less so in the blue-ribbon suburbs where demand remained strong, preventing any major declines.
At Abercrombys we are setting our sails to catch the rising wind of the recent interest rate cut, as well as further cuts that economists are forecasting. Employing our discreet marketing strategies we have recently listed a range of handsome properties for sale, which will be offered both at auction, and prudently, privately, using our focused marketing methodology. Astute property investors should contact one of our experienced, friendly agents to avail themselves of a full team of knowledgeable, eager sales professionals. Abercrombys’ expectation is to go beyond yours.