Rebecca Hickey was on track to buy a house in Brisbane at the end of last year – then a February interest rate cut sent prices soaring beyond her budget.
“The prices are going up now that the interest rates are going down, everyone’s a little bit more competitive,” she says.
With an election on the horizon, she’s not blaming the government or the Reserve Bank – just hoping for a bit more help.
After the RBA in February delivered the first rate cut in five years, home prices jumped out of a three-month slump to record two months of growth.
CoreLogic data saw prices hit a new peak in March, rising 0.4% across the eight capital cities on top of an 0.3% lift in February. That was prompted by the cut and hopes of more on the horizon, according to Commonwealth Bank economists Belinda Allen and Lucinda Jerogi.
“Home prices have appeared to turn a corner, and we expect growth to continue this year,” they wrote.
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Clinton Waters’ mortgage broker business in Melbourne has handled its highest ever dollar value of pre-approved home loans ahead of February’s cut as aspiring homeowners hurried to get into the market.
“We’ve seen first home buyers really come out of the woodwork,” said Waters, director at Axton Finance.
But some hopeful buyers, like Brisbane high school teacher Lexi Iacovou, are stuck playing catchup as home prices continue to surge.
Iacovou bought in Brisbane’s outer south for $440,000 in 2023 to get a foothold but still doesn’t think she’ll be able to afford her dream place in the city’s inner west for at least another year.
“If the interest rates were at 2% or 3% I could afford a property that I want to live in,” she said. “But because the interest rates are so high, I’m paying so much extra.”
‘It’s already very populated’
As it fights for re-election, the Albanese government has underwritten a swag of subsidies and grants for thousands of buyers every year such as an expanded Home Guarantee Scheme and the forthcoming Help to Buy program.
The Coalition, meanwhile, has proposed allowing buyers to withdraw from their superannuation to buy their first home and directing the financial regulator to relax rules for approving home loans.
While the opposition leader, Peter Dutton, says Labor has left Australians “locked out of the property market,” hopeful homebuyers aren’t so quick to blame the Albanese government.
“I think they’re doing what they can to try and get first home buyers into the market,” Iacovou said. “It’s already very highly populated.”
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Hickey is less forgiving, unimpressed by either party’s offering and held back from accessing government help as her ideal home costs more than the maximum threshold on some programs.
She says the Coalition’s superannuation policy is “a terrible idea” and says the Help to Buy scheme, which would see the government join bidders and buy out an equity stake in a home, “doesn’t appeal to me at all”.
Despite the initial price rises, both Iacovou and Hickey say the RBA’s interest rate calls are the bigger factor and are watching and waiting for future cuts.
But the Reserve Bank governor, Michele Bullock, on Tuesday downplayed the RBA’s responsibility for home affordability and said it was “tenuous” to claim interest rates had put the heat back in the housing market.
“House prices is not [our] mandate,” she said, emphasising the Bank’s focus on inflation and unemployment.
“I don’t have any particular things to say to people who are finding it difficult to enter the housing market, other than to emphasise that there needs to be a supply response.”
The RBA left rates on hold on Tuesday but analysts such as Westpac economist Matthew Hassan expect a handful of rate cuts this year will keep house prices on the rise.
“A gradual and moderate interest rate easing cycle [means] housing markets will continue to get doses of support through the rest of 2025,” he wrote.
And with Westpac among those expecting the next rate cut as soon as May, the upward pressure on prices looks set to remain.
