Inside Real Estate – 13 November 2024: Fueling our industry for 2025

We are now only 6 weeks away from Christmas, so many of us will be considering where the market is likely to go as we enter 2025.

When will interest rates come down? Will property prices go up? How many new sellers and buyers are likely to enter the real estate market?

We’ve all been around long enough to know that there are many indicators than can help shape our industry. Some of those recent indicators include the anticipation of when interest rates may go down, the recent softening of sale prices, Victorian investor response to new(ish) land taxes and even the results of the US election.

However, when we pare it all back, it’s the circumstances and borrowing power of individual buyers that really has the most significant impact on the buoyancy (or otherwise) of the real estate industry.

For most people, housing affordability is at an all-time low – particularly for those in New South Wales, Tasmania and Victoria. Just 3 years ago, the ‘typical’ household could afford 43% of homes sold, but today, that same household can only afford 14% of homes. This dramatic decrease means that finding affordable housing is no longer a matter of simply saving up – it’s a growing financial and social struggle.

But that isn’t the only challenge. Trying to save a 20% deposit (while also paying rent) requires the ‘average-income’ household to save 20% of their income for 5.6 years. This leaves many buyers feeling demoralised, or under significant stress, in particular for those trying to juggle financial priorities alongside family responsibilities or the desire to provide stability for their children.

In a recent report PEXA reveals that in 2023, more than 1 in 4 residential properties were purchased with cash – exacerbating the existing intergenerational wealth divide and making it even harder for younger Australians to get into the property market. For younger generations and first-time buyers, this cash-buying trend is daunting – it feels like they’re competing on an uneven playing field where wealth, rather than opportunity or merit, often determines success.

So, if we want to be proactive about creating an industry where we all win, the question we really need to answer is ‘what can we do to help buyers trying to enter the market’?

Leveraging government schemes, consolidating debts, accessing equity and considering a ‘rentvesting’ strategy are all options that can help buyers get a foothold, or take a next step in the property market.

Most of us will also have good relationships with mortgage brokers – and it’s those brokers who can structure loans that align with a buyer’s capacity to service it and help them get ready to purchase sooner that will be highly sought after.

There are always going to be broader economic forces outside of our control that directly impact the real estate market, but one thing we can have some influence over is helping buyers enter (or re-enter) the market. Whether it is sound advice, resource sharing or innovative financial planning – it can all make a difference.

Real estate will continue to face its ups and downs, but with a more inclusive, supportive approach, we can contribute to a market that opens doors for more Australians, creating long-term value and stability across generations.

Until next time,

Stay connected.