Get the latest big banks cash rate forecast and learn how property prices will surge in 2025

Factors Influencing Interest Rates

Inflation

The RBA uses inflation as a primary indicator for interest rate adjustments. If inflation is higher than the target range, it may lead to an increase in interest rates to slow down spending and control prices. On the other hand, if inflation is within the target range or trending lower, it may result in a decrease in interest rates to stimulate spending and boost economic growth.

Economic Growth

Interest rates can also be influenced by the strength of the economy. A growing economy may lead to an increase in interest rates as there is more demand for goods and services, resulting in higher inflation. The projected economic slowdown in Australia may result in the RBA keeping interest rates low to support economic growth. Good news for property investors!

Employment

High employment rates suggest a strong economy, and interest rates may increase to prevent the economy from overheating. On the other hand, during periods of high unemployment, the RBA often lowers interest rates in an attempt to stimulate the economy and create jobs. It’s essential for investors to stay informed about these economic factors as they greatly influence investment decisions.

House Prices to surge in 2025

The RBA’s decision to maintain current interest rates is poised to exert a significant impact on the country’s real estate market.

Based on the current economic indicators, it is expected that interest rates will remain low for the foreseeable future. However, this may change in 2025/26 depending on various factors such as inflation, economic growth, and employment rates.

The OECD’s inflation outlook suggests that interest rate rises are on the horizon. While an economic slowdown is very much on the cards in Australia, global growth is anticipated to pick up in the coming years.

This will have an impact on the nation’s housing market, as a recent report by KPMG highlights. According to the Residential Property Market Outlook report, national house prices are predicted to jump around 10% from mid-2024 until mid-2025. The report’s authors assert that this surge will be driven by a combination of rate cuts and constrained housing supply.

Source: KPMG Economics report, Sept 2023

Source: KPMG Economics report, Sept 2023

This predicted housing price surge would resemble the housing boom of 2021, during which house prices increased 29%.

Summary

Interest rates are expected to remain low heading into 2024, and a surge in house prices is expected from mid-2024 till mid-2025, similar to the housing boom seen in 2021. Investors are now well-positioned to take advantage of the current low-interest-rate, high-potential market environment.

Careful consideration and analysis of economic indicators will be crucial in making informed investment decisions in the coming years. That’s why at Ironfish, we are constantly monitoring market trends and providing our clients with expert advice to navigate the ever-changing landscape of property investment.

Our advice is always to take a long-term approach to property investment, focusing on the fundamentals of supply and demand, rather than short-term market fluctuations. With the right strategy and expert guidance, investors can capitalise on the current housing market conditions in Australia and achieve their long-term wealth goals. So don’t wait, contact us today and start your journey towards financial success through smart property investment.