Aussie home buyers buoyed by RBA's recent interest rate drop, but prospect of future cuts could lead to price rises, Finder expert says
The claim follows research carried out by comparison website Finder after the Reserve Bank of Australia delivered its second rate cut of 2025.
The cash rate now sits 0.5 per cent below its 2024 level, driving the appetite for property purchases as mortgage rates reduce.
Finder's Consumer Sentiment Tracker showed 36 per cent of Aussies felt now is a good time to purchase property, up from 29 per cent in May 2024 and 25 per cent in May 2023.
Millennials and Baby Boomers were most encouraged by the news with two in five saying now is a good time to buy.
Finder money expert Richard Whitten said demand will heat up as borrowing costs fall; however, this could cause a house price spike for the Aussies desperate to break into the market.
'This could mean prospective buyers have less flexibility when negotiating a price as demand spikes,' Mr Whitten said.
'The forecast to cut the cash rate two more times by Christmas will improve sentiment even more.
'Some homeowners might be holding off putting their property on the market until interest rates fall further, which means fewer properties available to buy, propping up prices.'
House prices in Australia rose 3.2 per cent in the year to April 30, according to CoreLogic, and have jumped more than 40 per cent over the past five years.
The relatively low price rises over the past 12 months could be a thing of the past due to the boost in consumer confidence from the rate cuts, Mr Whitten said.
'The latest cash rate cut is expected to bolster consumer confidence further in the housing sector, as lower borrowing costs make property investment more accessible,' he said.
'The reduced cost makes real estate a more attractive asset class.'
Finder's analysis of data from the Australian Bureau of Statistics showed the number of owner-occupied loans issued rose 4.1 per cent in May compared to a year before, while the average home loan size grew 8.3 per cent to $659,920.
Commonwealth Bank of Australia and Westpac are each expecting two more 0.25 per cent interest rate cuts in 2025 to bring the cash rate down to 3.35 per cent.
ANZ expecting two consecutive cuts, bringing the cash rate to 3.35 per cent in August, while NAB expects three cuts for a terminal cash rate of 3.1 per cent in November.
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