A wise financial advisor once told me that in good times, most people are guilty of ramping up their lifestyles but when the tide turns, it’s very difficult to start cutting back on items that you’ve become accustomed to enjoying. As a result, we didn’t really see the property price crash when many rolled off their cheap fixed rate loans and entered the new higher rate environment where monthly repayments almost tripled. However, the data is showing that Australians have been depleting cash reserves and holding, waiting and hoping for a cut to rates and better economic conditions.
These improved conditions never materialised in 2024 and we saw new listings skyrocket through spring. Stock levels were 13% higher than we’ve seen since 2019, so buyers all of a sudden had plenty of choice. With a growing volume of property available, sellers had to adjust expectations as supply versus demand tilted in favour of buyers and overall conditions became a buyers’ market. Late in the year, the data started to catch up as CoreLogic noted prices began to fall in Sydney and the speed of the price falls accelerated into Christmas.
It’s merely a market cycle, however most would hold the view that we’re near or at the bottom of the cycle. With Australia in a per capita recession, such conditions should not linger for too long, although we need to do a lot to dig ourselves out of this weak economic environment. This leads us into the new year and conversations to start 2025 show cautious optimism. We’ll be looking for a reset in buyer enthusiasm and focus, with hope that this energy translates into positive transactions. Looming over the market though are the current economic conditions, with marginally falling inflation and higher rates still in play. Therefore, we suspect we’ll see a boost in buyer energy somewhat tempered by a restrictive lending environment that should keep market conditions balanced.
