Property Alert: New Policies, Lower Rates, Rising Demand

A Reawakening Market

It’s no secret that election periods often cause buyers and sellers to hit pause. This recent one was no different. The market experienced a slowdown in decision-making, and activity softened temporarily as people waited to see the outcome.

But with the election now behind us and life returning to normal, signs of pent-up demand are already beginning to surface. As we head into winter—a season traditionally slower for real estate—there are reasons to believe this year could buck the trend.

Political Stability Boosts Confidence

The re-election of the Albanese-led Labor government removes a significant layer of uncertainty. Markets, businesses, and consumers all respond better when the path ahead is clearer. In this case, Labor’s win signals continuity, particularly in housing policy, which featured prominently during the campaign.

Labor’s focus on housing affordability, sustainability, and equity has been well documented. Two key initiatives stand out for buyers:

1. Expansion of the First Home Guarantee Scheme
   From January 2026, this scheme will allow first-home buyers to purchase with just a 5% deposit and avoid Lenders Mortgage Insurance (LMI). Importantly, income caps will be scrapped, the annual participant cap removed, and property price caps raised—broadening access significantly.
2. $10 Billion to Build 100,000 New Homes
   Targeting both renters and buyers, Labor has recommitted to building energy-efficient homes over the next five years. These will meet a minimum 7-star energy rating and form part of a wider push toward climate-friendly housing.

For first-home buyers in particular, these changes could make a real difference in both affordability and timing. The expansion of shared equity schemes and government-backed guarantees means less reliance on parental support and the potential to enter the market sooner.

Interest Rates: Relief Is Coming

Perhaps the most significant development for all property buyers—first-home buyers and seasoned investors alike—is the shift in interest rate expectations.

The latest inflation data has changed the game. For the March quarter, annual CPI held at 2.4%, while the RBA’s preferred trimmed mean measure dropped to 2.9%—both comfortably within the RBA’s target band of 2–3% for the first time since 2014.

Services inflation, often sticky, also showed signs of easing, driven by falling rent and insurance costs.

As a result, the National Australia Bank is now forecasting a series of rate cuts starting this month:

• A 50-basis-point cut in May
• Further 25-basis-point cuts expected in July, August, November, and February

That’s a total reduction of 125 basis points over the next 10 months. If this prediction proves accurate, we could see a dramatic shift in borrowing capacity, monthly mortgage repayments, and overall buyer sentiment.

Media Buzz Could Spark FOMO

As media attention around rate cuts intensifies, buyer psychology will likely shift rapidly. When news headlines highlight improved affordability and easier lending conditions, FOMO (fear of missing out) tends to follow. Many buyers—especially those who’ve been watching from the sidelines—may rush to enter the market before prices rise. This urgency can lead to faster decision-making, increased competition at auctions, and upward price pressure—particularly for quality homes in sought-after areas.

Tight Supply and Strong Demand = Price Pressure

While rate cuts support affordability in theory, they also risk stoking demand—especially if housing supply remains tight. And that’s exactly what we’re seeing now.

In many Melbourne suburbs, the number of quality listings is falling well short of buyer demand. This imbalance, particularly in established, high-demand areas, is already putting upward pressure on prices. Add interest rate cuts to the mix, and the competition could heat up quickly.

For buyers, this means acting sooner could be a wise move—before broader market activity resumes and prices follow.

Winter May Not Be So Quiet

Traditionally, winter is a time when the market cools, listings slow, and buyers take a break. But this year may be different.

With interest rate cuts likely, government support expanding, and political certainty restored, there’s growing confidence returning to the market. And for those who have been sitting on the sidelines, this moment presents a rare combination of opportunity and motivation.

Sellers may wait until spring, but savvy buyers could get ahead of the competition by transacting now—particularly while stock levels remain manageable and before rate cuts fully kick in and intensify buyer demand.

What Buyers Should Do Now

If you’re considering a purchase, here are a few smart moves to consider now:

• Get finance ready: Speak with a broker or lender to understand how much more you might be able to borrow as rates begin to fall.
• Stay informed on grants and schemes: Government policies are shifting. Ensure you’re up to date with what you’re eligible for—especially if you’re a first-home buyer.
• Act early: With prices likely to firm over the next 6–12 months, timing your move ahead of the crowd could deliver better value.
• Be selective: Even in a competitive market, focus on quality properties in desirable locations with strong long-term growth prospects.

Final Thoughts

The property market is emerging from its temporary slumber. With a newly re-elected government, supportive housing policies, and falling interest rates on the horizon, the fundamentals are aligning for a strong second half of 2025.

If you’ve been waiting for the right moment to make a move, now could be it.