2025 will be a year of amplified divergence in markets

The announcement of Australia’s first cash rate cut since November 2020 has been met with positivity by most stakeholders. Markets had been pricing in a reduction for a while now, but stubbornly high inflation kept delaying the move. Economists were regularly reassessing their rate predictions throughout 2024 – many even suggesting we’d have to wait until the second half of 2025 for the cut.

The decision this month will not only deliver some relief to mortgage holders but also bolster buyer confidence. Increased borrowing power along with expectations of more cuts as the year progresses should stimulate activity. If a reduction in loan serviceability buffers accompany rate cuts, that would improve buyer confidence too.

Another important event this year will be the federal election. The poll date is still to be announced as at the time of writing. Property markets traditionally slow down during an election. However, because we’re a politically stable nation, the outcome doesn’t normally tend to dramatically shift prices in the medium to long term.

In my opinion, 2025 will be a year of amplified divergence in markets – a position supported by the submissions in this edition of Month in Review. Australia’s property landscape is complex. It comprises multiple smaller markets described by location, property type and price point. In 2024 we saw post-COVID market divergence firmly established. For example, our capital cities tracked varied paths. While Perth, Adelaide and Brisbane enjoyed substantial value growth, Sydney and Melbourne experienced far softer results – some sectors even saw values retract. Those disparate performances were experienced across various regional markets too.

This month’s submissions from our offices around the country suggest this splintering in market performance could magnify in 2025. Our teams across the nation have delivered varied market predictions. Even within the same location, some price points look set to outperform others. Similarly with housing types – just look at the way unit price growth exceeded detached houses in several key markets last year.

For commercial property readers our valuers have delivered their expectations of retail property market performance in 2025 across major population centres. What’s most compelling is that many appear more upbeat about the sector than in the past. Commentary suggests a sustainable balance is being reached between online trading and physical brick-and-mortar shopfronts in the sector. This bodes well for retail property owners moving forward.

Finally, our rural teams discuss a range of primary production sectors and how property in those industries will fare during 2025. It’s a broad array of industries which will again see varied performance in the months ahead.

We hope you enjoy this, our first edition of Month in Review for the year.

Gary Brinkworth
CEO