“New Beginnings for Property in 2025”

Hi everyone, I’m Jason Mudford from OBrien Real Estate with the first edition of the property news for 2025.

The year 2025 marks us being a quarter of the way into the century, and numerology states it’s a year of completing, personal growth, and helping others. Wishing you all health and happiness for the new year ahead.

Looking at the Monthly Home Index Indices for December as reported by CoreLogic, you’ll see that December 2024 capped off a lacklustre year for Victoria, with Metropolitan Melbourne pulling back 0.7 per cent on median home prices and Regional Victoria pulling back 0.3 per cent.

The next graph also from the CoreLogic home index report reveals the performance of the major states and territories across Australia over 2024. You’ll see Perth was the best performer in 2024 producing 19.1 per cent growth in median home prices with Melbourne unfortunately fairing the worst with a retraction of 3 per cent for the year. ?

Nationally rents had their smallest quarterly rise since 2018. Melbourne units was the second best performing rental yield sector across the nation recording a 4.8% yield, with Darwin the strongest with the largest yield of 7.9%.

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The US Federal Reserve continued its interest rate again cuts in December, The US started cutting interest rates in September, with a 0.5 per cent interest cut followed by another 0.25 per cent cut in November and on December 19, they cut again 0.25 per cent, taking it to a cash rate of 4.25 per cent to be now lower than Australia's.

The big news globally though is the new US President elect taking office on 20 January and all eyes will be on what tariffs are imposed on imports, reports are the tariffs will range from 60% to 100%. These tariffs could place inflationary pressure on the local US markets and could lead to central banks pausing on further rate cuts. President Trump will also be pushing his Pro-Growth policies for personal and business tax cuts and an increased focus on Artificial Intelligence. Looking locally, Ryan Felsman, chief Economist of Comm Sec believes the government spending in Australia is really pushing the economy forward, he predicts 1.8% growth to our economy is 2025. Our inflation is moderating, our unemployment rate is the lowest in 48 years. Australia is also more open to trade with the Aussie dollar hovering around 62 US cents, the lowest in 2 years.

Two new property taxes start from 1 January 2025, the 7.5% tax on short term accommodation comes in as well at the new Land Tax for Vacant Residential Properties (VRLT). The Victorian Government introduced VRLT to help address the lack of housing supply and it applies to residential land with an existing home on it that is vacant for more than 6 months in the calendar year preceding the tax year as well as residential land with a home on it that has been under construction or renovation for 2 years or more plus a home on it that has been uninhabitable for 2 years or more. The VRLT from 1 January 2026 onwards may also apply to unimproved residential land in metropolitan Melbourne, meaning land without any housing on it that has remained undeveloped for at least 5 years and is capable of residential development.

Further useful and beneficial housing reforms are on the way for Victorians, with the passing of the bill through Victorian Parliament in late November, the changes affect three main areas, the permanent residential rental market, increased obligations for real estate professionals, and adjustments to planning and development regimes. More information can be found via this REIV link https://reiv.com.au/our-industry/news/housing-statement-rental-reforms-explainer

Remember the information provided is of a general nature, you should always seek independent legal, financial, taxation or other advice in relation to your unique circumstances.

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