Is the property downturn already over?
As 2024 came to an end, there were two clear stories about the property market. First, some sort of correction seemed likely to occur in the near future, given that December was the first month of negative price growth in almost two years. Second, there was a widespread expectation that interest rates would be lower at the end of 2025 than 2024.
Now the story around property prices looks very different, in part because many people still believe rates are likely to trend down throughout this year.
“Australia’s housing market has staged a remarkable recovery in January 2025, bouncing back to growth after just one month of price declines. This swift reversal could potentially rank among the shortest market downturns on record,” according to Ray White Group Chief Economist Nerida Conisbee.
“The resurgence appears to be driven by several key factors. Most significantly, growing expectations of an interest rate cut have boosted market sentiment. This anticipated monetary easing would increase buyers’ borrowing capacity and reduce mortgage payments for existing homeowners. Market confidence has also been bolstered by these positive rate expectations.
Additionally, a seasonal reduction in new listings, combined with more cautious seller behavior, has created tighter market conditions. Once interest rates do decrease, we could see a rapid shift from the buyers’ market experienced in late 2024 to conditions favoring sellers.”
Constrained supply leading to increased demand
While lower interest rates are likely to stimulate the property market in the short term, Ms Conisbee said “a persistent structural undersupply” would cause prices to keep rising over the long term.
“We appear to be experiencing a fundamental shift in the property market’s dynamics, where traditional cycles of significant ups and downs are being replaced by sustained long-term price growth, interrupted only by brief corrections,” she said.
“The supply constraints facing the market are multifaceted and deeply entrenched. The construction industry is operating at capacity, while decades of undersupply have created a significant construction backlog. This is compounded by a fundamental mismatch between available housing stock and shrinking household sizes. Construction timeframes have permanently extended, and the industry faces workforce challenges with an aging labor pool that isn’t being replenished quickly enough.”
Ms Conisbee added that these structural constraints effectively created a floor for property prices and limited the potential for significant price falls.
How to get ahead of future price rises
Property prices have increased significantly over the past five years and Ms Conisbee’s analysis suggests prices are likely to continue rising in the years ahead.
So if you’re thinking about buying and you have the financial capacity to do so, it might make sense to take action sooner rather than later.
Licensing statement: Rayne Finance ABN [70 605 100 838] is authorised under LMG Broker Services Pty Ltd Australian Credit Licence 517192. Disclaimer: (1) As with any financial scenario there are risks involved. This information provides an overview or summary only and it should not be considered a comprehensive analysis. You should, before acting in reliance upon this information, seek independent professional lending or taxation advice as appropriate and specific to your objectives, financial circumstances or needs. This publication is provided on the terms and understanding that: (2) LMG Broker Services Pty Ltd, Rayne Finance (Seed Lending Pty Ltd) and the authors, consultants and editors are not responsible for the results of any actions taken on the basis of information in this publication, nor for any error in or omission from this publication. (3) LMG Broker Services Pty Ltd, Rayne Finance (Seed Lending Pty Ltd) and the authors, consultants and editors, expressly disclaim all and any liability and responsibility to the maximum extent permitted by the law to any person, whether a purchaser or reader of this publication or not, in respect of anything, and of the consequences of anything, done or omitted to be done by any such person in reliance, whether wholly or partially, upon the whole or any part of the contents of this publication.
Explore other FAQs and Facts
Savings: The Foundation of Your First Home Deposit
Saving for your first home is not just about how much money you have. Lenders also look at how your deposit has been built over time. Understanding the difference between savings and genuine savings early can make the entire home buying process clearer and far less stressful.
Buy now pay later (BNPL): Helpful for Christmas but will it hurt your home loan chances?
Did you use BNPL to get through Christmas? You’re not alone. But with new credit rules now in place, even small pay-later habits could affect your chances of getting a home loan. Here’s what’s changed, what lenders are looking at, and how to make sure your BNPL use doesn’t hold you back.
Regional Victoria: Why buying now stacks up
Regional Victoria’s property market has hit a sweet spot in 2025. Towns like Ballarat, Bendigo and the Surf Coast are seeing steady growth supported by real demand, thriving infrastructure and better buyer choice. With balanced conditions and lasting value on offer, it’s an ideal time to make your move locally.
The Block Daylesford: TV Hype vs. Market Reality
The Block’s Daylesford finale made headlines for all the wrong reasons, but beyond the TV drama, the regional outcome was far from a failure. With three homes selling over $3 million and millions injected into the local economy, the real winner wasn’t the contestants, it was the town.
Five tips to get your property ready for sale
Spring is peak selling season, with listings up 14.4% in August alone. Warmer weather, blooming gardens, and longer days bring buyers out in force. If you’re thinking of selling, small changes like freshening up your street appeal or boosting natural light can make a big impact on both speed and price.
50,000 new places in the Home Guarantee Scheme
From 1 July 2025, an extra 50,000 places are available in the Home Guarantee Scheme, helping eligible buyers purchase a home with a smaller deposit and avoid lenders mortgage insurance. The scheme has already supported over 160,000 Australians since 2020, with tailored guarantees for first-home buyers, regional buyers, and single parents.
How property markets are performing throughout Australia
Australia’s property market is maintaining steady momentum, with dwelling prices rising 1.7% in the first five months of 2025. Perth leads annual growth at 8.6%, followed by Adelaide and Brisbane. Nationwide, demand is outpacing supply, fuelled by interest rate cuts, strong migration, and renewed buyer confidence.
How much do you need for a home deposit?
Buying a property but don’t have the deposit in cash right away? There may be an alternative worth considering. In some situations, buyers can provide a guarantee instead of upfront funds. It’s a tool that can offer flexibility without compromising the seller’s confidence, but how does it actually work?
What are deposit bonds and how do they work?
Buying a property but don’t have the deposit in cash right away? There may be an alternative worth considering. In some situations, buyers can provide a guarantee instead of upfront funds. It’s a tool that can offer flexibility without compromising the seller’s confidence, but how does it actually work?
Understanding conditional loan approval
Thinking about buying a property? You’ve probably heard the term “conditional approval” thrown around but what does it actually mean, and how does it differ from unconditional approval? Understanding the difference can help you feel more confident, better prepared, and avoid surprises as you move through the home loan process.