Buying a new house in Melbourne hasn't been an easy process for Madeline Riseborough, as she says with the cost of living crisis, her budget "keeps getting blown out".
"We think we've got a track on things, and then all of a sudden, you realise that all your money is actually going towards health and groceries rather than any actual discretionary spending," Riseborough told SBS News.
"Then it still looks like you're spending out of your budget anyway."
The year 2024 ended with good news for potential Australian home buyers like Madeline, something many had looked forward to over the past few years.
Potential homebuyer Madeline Riseborough says that with the cost of living crisis, her budget keeps getting blown out. Credit: SBS
PropTrack's latest report shows home prices dropped 0.17 per cent nationally in December.
Another report by CoreLogic also indicated
While home values declined in capital cities by 0.25 per cent in the month of December, prices increased by 4.73 per cent nationally in 2024, according to PropTrack.
This rise and drop is what Riseborough is experiencing while she continues her house hunt.
"It's a bit weird. I mean, for a while, we were seeing a lot of stuff listed, and then prices kept getting increased and then weirdly, now there are things that we get alerts that are being decreased," Riseborough said.
"We weren't even expecting things to be listed over Christmas ... We weren't even expecting inspections or anything. We just didn't think that there'd be the push for it.
"We have no idea what's going on."
Will buying a house be easier in 2025?
The PropTrack report revealed the median home value in Australia is $795,000.
Some Australians hope this number will decrease in 2025, making buying a home easier.
Some experts believe this depends on many factors.
Anne Flaherty, senior economist with PropTrack, said: "I think it's going to very much depend on whereabouts in Australia you live. I think that we are likely to see home prices decrease in certain capital cities such as Melbourne and Canberra."
"In places like Perth and indeed in a lot of our regional markets, we're probably not going to see prices decrease," she told SBS News.
On the other hand, CoreLogic's report predicts housing will "become more affordable as value growth stalls and incomes rise".
Tim Lawless, CoreLogic's research director, said: "As interest rates and cost of living pressures reduce, it should become easier for buyers to access the housing market. However, it will take some time for household savings to accrue following the reduction in savings over the past few years."
"Overall, we are expecting a softer outcome for housing values in 2025 than what we saw in 2024, with values likely to rise by less than 5 per cent nationally over the calendar year," he told SBS News.
According to CoreLogic, "the key trends to watch in 2025 will be a reduction in the cash rate, any changes to macroprudential policies, a further slowdown in net overseas migration, an ongoing shortage of newly built housing, and some potential improvements in housing affordability".
Here are the changes that potential home buyers need to track in 2025:
Interest rates pushing property prices
Experts say the interest rate will be one key factor impacting housing in 2025.
Flaherty said a potential decrease in interest rate may "push property prices higher because it means that people can borrow more and afford higher mortgage repayments".
"I think that over the first few months of 2025, we will see national home prices decline. However, in the second half of the year, I think that we are likely to see prices rise, which will be off the back of a decrease in interest rates."
since November 2023 and will have its next meeting in mid-February.
Earlier in December, the RBA kept the official cash rate at 4.35 per cent after its final board meeting of 2024. Source: AAP / Steven Saphore
Macroprudential policies to 'dampen housing activity'
"Any changes to macroprudential policies are likely to flow through to housing markets," the CoreLogic report states.
Macroprudential policies are rules designed to regulate and oversee the financial system as a whole to lower the risk of a financial crisis.
Lawless said one of these policies could be about "an excessive lift in household debt levels, which are already around historic highs and mostly underpinned by housing debt".
"As we saw through previous periods of credit tightening, such as the macroprudential measures that were implemented in 2014 and 2017... less access to credit would dampen housing activity," he said.
Less migration will lead to 'less aggregate housing demand'
According to CoreLogic, net overseas migration is another trend that will impact housing in 2025.
, down from 190,000 in the previous financial year.
"A further reduction in overseas migration will see less aggregate housing demand, especially across the rental sector where rental growth is already flattening out," Lawless said.
'More homes for sale, more choices'
In October, the Business Council of Australia reported that based on the federal government's Housing Accord target,
The number of new homes coming to the market in 2025 can also impact home values this year.
Flaherty said this is one of the reasons that house prices decreased in December 2024.
"What that means is that for buyers, it's not as competitive out there as it was a year ago. There are more homes for sale, they do have more choices, and properties are taking a bit longer to sell," she said.
"If we look at the trend that we were seeing over the last few months of 2024, we are likely to see more homes hit the market over the start of 2025."
Potential improvement in housing affordability
CoreLogic's report states lower cost of living pressures should "provide some additional support for housing demand and could help keep a floor under values in 2025".
However, Lawless said this may take some time.
"Although access to housing is set to improve through the year, it will take some time for housing affordability to return to more normal levels.
"We should see an improvement in housing affordability as household incomes rise faster than housing values and serviceability constraints improve on the back of lower interest rates and an easing in cost of living pressures."
