For aspiring home buyers, 2025 could be the year opportunity knocks.
With interest rate cuts expected, borrowing capacity is set to increase, making it more opportunistic for buyers to secure a home loan.
But that’s not the only reason why those looking to upgrade or buy their next home may want to act sooner rather than later.
Interest rate cuts could boost borrowing power
According to Executive Manager of Economics at REA Group, Angus Moore, falling interest rates could give buyers more financial flexibility.
"We're expecting that we're going to see an interest rate cut this year, and that's going to boost borrowing capacity for buyers," Angus says.
This increase in borrowing power could make upgrading or securing a next home more achievable for many Australians.
Williamstown offers great family sized homes, like this period home, that could become more affordable with interest rate cuts. Picture: Getty
Jellis Craig Richmond Director and Auctioneer Elliot Gill says 2025 is shaping up to be a particularly strong year to upgrade.
"The bold prediction for this year is the tougher the market is, the better the conditions for an upgrader," he says.
"I think many are going to look back at 2025 and wish they’d made that move."
Upgraders can leverage equity
Angus says upgraders have been particularly active in recent years, “after big increases in their home equity on the back of home price growth throughout the pandemic”.
But one key hesitation for many upgraders is whether they’ll be able to secure their next home.
"As the upgraders typically do sell first… the fear factor for them is always not being able to find that next property," Elliot explains.
"I think this year is going to give them [upgraders] that opportunity to have a lot of choice available and give them a great deal of confidence to make that move."
Jo Vadillo, Founder and CEO of Advocate Property Services says if you're buying and selling in the same market, it's not such a big issue.
“But if you're concerned about then not being able to buy another property, start to look concurrently as you're readying your house for sale.”
More stock means more opportunities for buyers
With property listings increasing, particularly in Sydney and Melbourne, there are more choices for buyers than in previous years.
Melbourne and Sydney are seeing more listings than what there has been in 12 years, which includes many Victorian Terraces - perfect for upsizing. Picture: Getty
"The number of homes listed for sale is sitting at around the highest levels we've seen in a decade.” Elliot says.
Jo agrees that more stock in 2025 will create opportunities for buyers looking to upgrade.
"There's more stock coming available in the latter half of 2025,” she says.
“If you're looking to upgrade your property, there's going to be more opportunities out there.”
Moore says this will be a big incentive for next-home buyers to bite the property bullet.
“We're probably going to see people upgrading sooner than they might have otherwise chosen to on the back of that big increase in home prices we've seen in recent years, particularly in strong markets like Brisbane and Perth.”
Navigating the market with confidence
If you’re looking to upgrade in 2025, buyers who prepare early will be at an advantage. One way to stay ahead of the competition? Getting pre-approved for finance.
“A powerful tool would be to get pre-approval quickly, so you’re quick to market and hit the ground running,” CommBank Home Lending Specialist Scott Duncan says.
While securing a competitive rate is an important factor, Scott says upgraders should also look at financial tools - such as multiple offset accounts - to reduce loan interest.
Securing a loan structure that works for your family and finances is critical to making a home upgrade viable. Picture: Getty
“It’s not just about the rates,” he adds. “Having an experienced lender behind you can make all the difference.”
How upgraders can finance their next move
For those thinking about upgrading Scott says that among many financial strategies there are two that tend to stand out.
The first is looking at what equity you have in your existing house, and the second is to consider a bridging loan so you don’t miss out on your dream property.
"A bridging loan will allow you to potentially purchase a property before you've sold your existing one, and that may give you a competitive edge when trying to secure the sale,” he explains.
The structure of your home loan is an important decision which, in some cases may lead to significant savings, particularly against a backdrop of falling interest rates.
As Duncan says, it’s not just about the rates, there are other things to look at such as multiple offsets that you can have against your loan to save interest.
"Offsets are quite important when you're looking at variable rates,” Duncan says.
“It may save you interest against your loan and potentially save you thousands of dollars.”
So, is 2025 the year to upgrade?
With borrowing power expected to increase, more properties on the market, and financial tools like bridging loans available, 2025 could be an ideal time for upgraders to make a move.
With competition tight, upsizers are going to have to put their best foot forward to secure a property, especially at auction. Picture: realestate.com.au
"We're probably going to continue to see people upgrading sooner than they might have otherwise chosen to on the back of that big increase in home prices we've seen in recent years, particularly in strong markets like Brisbane and Perth," Angus says.
Jo advises that knowing the market in your desired areas is key: "Keep an eye on the areas you're looking to buy into."
“Go to some of those open homes, attend the auctions and have a really strong understanding of what your budget's going to allow you to buy," she adds.
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