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Looming rate cuts and stirring investor activity could result in a “quiet resurgence” in Sydney and Melbourne’s housing markets.
Momentum is returning to residential property, with Sydney and Melbourne leading the way, after a historic correction in global equity markets.
Internal data and broker feedback from brokerage Home Loan Experts have shown rising activity in Australia’s two largest capitals, particularly among seasoned investors and high-equity buyers.
With the Reserve Bank of Australia (RBA) now expected to cut the cash rate multiple times in 2025, potentially by as much as 150 bps, according to some bank economists.
Indeed, the April monetary policy meeting minutes revealed the central bank’s willingness to revisit policy in the upcoming May meeting, seemingly leaving the door open to more rate cuts in the wake of escalating global economic uncertainties.
With interest rate expectations shifting rapidly, brokers are reporting a sharp increase in pre-approvals and renewed buyer interest across inner and middle-ring suburbs.
According to Home Loan Experts CEO Otto Dargan, the Sydney and Melbourne property markets are “heating up fast” and “most people haven’t clocked it yet”.
“We’re seeing clients prep to buy multiple properties. It’s the most confident I’ve seen investors in two years.”
Investor sentiment is currently outpacing that of owner-occupiers. Multiple-property buyers are leveraging their improved borrowing capacity to re-enter the market, while first home buyer activity remains subdued.
Affordability constraints and “limited support” from government schemes such as Labor’s “Help to Buy” shared equity initiative and the First Home Guarantee are holding back many would-be buyers, according to the brokerage.
While the Sydney and Melbourne housing markets are seemingly set for a boom, the resurgence in property interest is not uniform across the country.
Perth and Queensland had previously led post-COVID-19 price gains; however, brokers are now reporting signs of stabilisation in these regions. Buyer urgency in Perth has softened and some Queensland investors are beginning to sell off assets to lock in capital gains.
By contrast, auction clearance rates and buyer attendance in Sydney and Melbourne have risen significantly since the February rate cut.
In Melbourne, Dargan said, a drop in investor numbers is likely to drive rents higher.
“There’s still a shortage of housing and strong underlying demand, but borrowing power has been the bottleneck,” he said.
“With rate cuts coming, that pressure is easing – and capital city markets are responding first.”
While the current rebound is in its early stages, Dargan said he expects further acceleration in activity over the coming months if monetary policy continues to loosen.
“It may take until mid-year for this to be reflected in price data, but on the ground, the momentum is building,” Dargan said.
This article was originally featured in Real Estate Business's sister brand, Broker Daily.
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