A series of anticipated rate cuts are set to boost both borrowing power and buyer demand that could lead to a renewed surge in property prices, new data claims.
Compare the Market analysis has found that buyers with a household income of $200,000 per annum could see their borrowing power increase by as much as $100,600 if the cash rate were to drop 1 per cent over the coming months.
This, experts claim, could lead to bigger offers on houses and units in parts of the country, especially in cities where supply continues to fall short of demand.
Nationally, property prices have held strong in most of the state capitals despite recent headwinds from higher interest rates, inflationary pressures and economic uncertainty.
Latest property data shows national home prices grew 3.71 per cent over the 12 months to the start of May and 3.35 per cent across all capital cities.
It means a $800,000 home now sells, on average, $26,800 more than it did a year ago.
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Housing markets in Brisbane, Adelaide, Perth and Sydney in particular, have shown their resilience, according to property expert Andrew Winter.
“These markets have performed well in less-than-ideal conditions. Another round of rate cuts is likely to add fuel to the fire.”
Mr Winter said aspiring buyers may be anxious to “get a foot in the door” now before market
conditions become too competitive.
But he warned that the capacity to borrow more money would not make buying a house
easier for most people.
Real estate guru Andrew Winter urges anxious home buyers to get their foot in the door.
Here’s how future rate cuts could impact each Aussie state.
QUEENSLAND
The biggest future rate cut winners would be mortgage holders in New Farm, where the average cost of a house is sitting at $2.87m.
A 0.25 per cent rate cut would mean a saving of $367 a month on the mortgage of a typical New Farm house, while a 0.5 per cent drop would save $729 a month.
In Gumdale, where the average cost of a house is $2.4m, a 0.25 per cent cut would mean a $312 monthly saving, while a 0.5 per cent cut would equate to $620 a month off the mortgage bill.
In Ascot, mortgage holders paying off an average house could expect to save $306 (0.25 per cent cut) and $620 (0.5 per cent cut) a month.
Outside of greater Brisbane, a 0.25 per cent rate cut would mean a monthly saving on a median-priced house mortgage would be $158 on the Gold Coast, $146 on the Sunshine Coast, $73 in Townsville, $82 in Cairns and $93 in Toowoomba.
Read the full QLD market insight here.
Buyer competition will likely heat up once future rate cuts have been passed by the RBA.
NEW SOUTH WALES
New homeowners could get more than $400 a month back into their pockets in more than 250 Sydney suburbs if expected rate drops come to fruition.
If rates were to drop 0.5 per cent in the coming months, homes priced at the current median would become $5000 a year cheaper in hundreds of suburbs – including Parramatta, Castle Hill, Marrickville, Epping, Hurstville and Randwick.
Additional Mortgage Choice research showed home buyers across the state will also get an average increase in their borrowing power of about $45,000 with a 0.5 per cent cut.
But coming rate cuts would also bring a twist as prices are expected to be pushed higher.
Following the February cash rate cut, the first rate reduction in over four years, Sydney property prices lifted to a new high, recording a median price of $1.118m in April, according to PropTrack data.
Read the full NSW market insight here.
A boost to borrowing power could see auctions turn into fierce battle grounds. Picture: Tom Parrish
VICTORIA
Victoria’s typical house hunter is just days away from an up to $35,000 boost to their home buying hopes, with predictions of 2025’s second interest rate cut on Tuesday.
Figures from Compare the Market show Melbourne homeowners who are able to pay the state’s average $628,000 home loan today, which covers homes up to $785,000 with a 20 per cent deposit, are just days away from being able to borrow $645,000 if there is even just a 0.25 percentage point cut.
That number will rise to $663,000 if more bullish hopes of a 0.5 percentage point reduction are realised, while by the end of the year it is looking likely a full 1 percentage point chop over a series of RBA moves could boost their borrowing power to a whopping $701,000.
That would be enough to get that homeowner an $876,000 property.
Read the full VIC market insight here.
Buyers line up in Melbourne to inspect a home. Picture: NewsWire/ Nadir Kinani
SOUTH AUSTRALIA
It goes without saying that the ones with the largest mortgages will save the most in the event of an interest-rate cut, but new data reveals that even those homeowners in South Australia’s most affordable suburbs stand to potentially more than $100in the event of an interest-rate cut.
Should the RBA cut the official cash rate on Tuesday by 0.25per cent, median-priced unit owners in Salisbury will see a mortgage repayment reduction of $54, assuming their lender passes on the cut in full.
A cut of 0.5 per cent would see them save $107 a month off their current monthly repayments of $2023 on a $421,843 property.
Unit owners in neighbouring Salisbury East would also see an instant saving of $60 a month if a 0.25 per cent rate cut is passed on in full, and $118 should a 0.5 per cent cut be passed on.
This would bring their repayments down from their current $2236 to potentially $2118 in the event of a 0.5 per cent cut.
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