Optimism Grows as Rate Cuts Loom
National Australia Bank CEO Andrew Irvine has struck an optimistic tone for the Australian economy, predicting a sharp drop in interest rates to 2.6% by early 2026. He expects the Reserve Bank of Australia (RBA) to begin cutting rates this month, starting with a bold 50 basis point move. If this happens, households could start to feel real financial relief, with each rate cut saving the average borrower around $100 per month.
According to Irvine, “Households and businesses should start to feel they’re coming out of what has been a really difficult couple of years.” He believes GDP growth could double this year compared to 2024, helped by easing interest rates.
Housing Prices Likely to Rise
While falling rates bring relief, they also risk reigniting price pressures in an already tight housing market. “If supply isn’t growing and demand increases, prices go up,” Irvine explained. “Lower rates could push house prices even higher.”
This highlights a growing concern: homeownership could become even more out of reach for first-home buyers unless Australia addresses its chronic housing shortage. Irvine stressed the need to shift the conversation toward supply-side solutions instead of focusing only on demand incentives.
Unit Prices Lag Behind Houses
Separate data shows apartment prices have risen much more slowly than houses over the past decade, making them a more affordable entry point for buyers.
- Sydney unit prices rose 28.4% in the past 10 years to $823,000
- Sydney house prices jumped 81.9% to over $1.69 million
- Similar trends were seen in Melbourne, Perth, and Brisbane
Experts say this disparity is largely due to a wave of apartment construction from 2015 to 2020, which kept unit prices relatively stable. However, many of these units were built for investors—not families—leading to a shortage of larger apartments suitable for long-term living.
First-Home Buyers Face Upgrade Challenges
While apartments offer an accessible market entry point, upgrading to a house remains difficult due to the widening price gap. With few large units available, second-home buyers often find themselves priced out of their preferred suburbs.
Economists argue that boosting apartment supply is essential for long-term affordability—especially in land-constrained cities. But for now, the cultural preference for detached homes remains strong, making housing density a longer-term shift.
What This Means for You
With interest rate cuts widely expected and prices likely to climb, this may be a critical window for buyers to act. Whether you’re looking to enter the market or plan your next move, having expert advice is key. Rodney McLoughlin provides trusted guidance in navigating the shifting property landscape with clarity and confidence.
Real Estate Newsletter
This article is a curated summary of various news stories from the past week, offering insights and updates on the real estate market. 9 May 2025
