Unlocking Opportunities: Falling Fixed Rates and Easing Rent Growth

Stay updated with the latest property market update

The Australian property market is always evolving, there have been some major developments that every first home buyer, investor, and homeowner should know.

Whether you're trying to get ahead as a buyer or you're an investor looking for new opportunities, this update is packed with valuable insights that could impact your next move.

Let’s dive into the latest trends shaping the market, from first home buyers making progress to falling fixed rates, easing rent growth, and renovation booms. There’s something for everyone in this dynamic housing landscape.

First Home Buyers Making Progress

A fifth of first home buyers who utilised the Federal Government’s low deposit loan guarantee scheme are now in an excellent position to transition out of it. More than 19,000 loans secured through the scheme have "graduated" since its launch in 2020. This shows just how effective the scheme has been in helping Australians enter the housing market.

According to Housing Australia’s Trends & Insights Report, over 63% of buyers using this scheme are ahead on their mortgage payments, with only 0.1% of loans in arrears. Jennifer Chew, Chief Program Officer of Home Ownership, emphasises how the scheme has been a lifeline for thousands of eligible buyers.

Here are some quick stats:

• 58,000 first home buyers used the scheme last financial year
• 28% of users are from Victoria, with top areas including Hoppers Crossing, Craigieburn, and Cardinia
• Queensland buyers made up 24%, while Western Australia contributed 15%

For anyone considering buying their first home, these figures are a sign of the market opening up. The right support could be just what you need to start your property journey.

The Housing Crisis – 20 Years in the Making

The ongoing housing crisis didn’t begin with COVID-19; it’s been brewing for the last 20 years. This is according to Jocelyn Martins, Managing Director of the Housing Industry Association (HIA). While there's no quick fix, there are viable solutions that could ease the pressure on the market.

Martins explained that the current tax system, which places a heavier burden on new home buyers, has contributed significantly to the decline in new home builds. The result? Fewer homes are being built, and the tax load on existing buyers is only getting heavier.Some potential solutions being discussed include:

• Increasing the supply of diverse housing options
• Securing funding for public housing beyond election cycles
• Investing in infrastructure to make shovel-ready land more accessible
• Restoring foreign investment in home building to boost rental supply
• Expanding the Home Guarantee Scheme to reach more buyers

These steps could not only help ease the crisis but also make the market more accessible to buyers.

Fixed Rates Dropping: Time to Lock in Your Loan?

Here’s some good news for those eyeing a fixed home loan: Australia’s major banks are dropping their fixed interest rates, with some now falling below 6%. If you’ve been holding out for a better deal, now might be the perfect time to act.

According to Jonathan Preston, Senior Mortgage Broker at Homeloanexperts.com.au, fixed rates could drop even further—potentially as low as 4%. However, variable rates may take longer to decrease to similar levels. The reduction in fixed rates is a clear sign that banks expect the Reserve Bank of Australia (RBA) to make future cash rate cuts.

This is a fantastic opportunity to lock in a low rate, especially with lenders adjusting their medium-term rates (two- to three-year terms). If you’re planning on securing a home loan, now might be the time to lock in a fixed rate and save thousands in the long run.

Rent Growth Slows, But the Market Remains Hot

In the past four years, rent growth in Australia has skyrocketed by 39%, but recent data suggests that this trend is finally slowing down. Research by CoreLogic reveals that despite the slowdown, annual rent growth is still significantly higher than pre-COVID levels.

Over the last 12 months, the cities seeing the most rent growth were:

• Perth: Up 11.6%
• Adelaide: Up 8.4%
• Melbourne: Up 7%

Even with this easing, rental properties remain a hot commodity, especially in high-demand areas like Sydney and Brisbane. However, rents in Sydney did fall by 0.3% in the three months leading to August 2024—the first decline in the city since the COVID lockdowns.

Renovation Boom on the Rise

The surge in renovation loans in Australia is showing no signs of slowing down. According to Money.com.au, renovation loans are one of the fastest-growing sectors, with a 9% annual increase. Many homeowners are choosing to renovate rather than relocate, driven by high property prices and limited housing supply.

The average loan size for renovations in Australia now sits at $640,998, with loans for owner-occupiers averaging $616,000 and investor loans averaging $627,000.Mansour Soltani, a home loans expert from Money.com.au, believes that this trend will continue as people opt to stay put and invest in their current homes rather than face the high costs of transacting in today’s market.

The Australian property market is full of opportunities if you know where to look. Whether you’re a first-time buyer, an investor, or considering renovations, there’s a lot to take advantage of. If any of these insights resonate with you, or if you’re ready to take the next step in your property journey, I’d love to help.

Book a one-on-one chat with Rasti to discuss how property investing could work for you: Book a Time. Or, if you're interested in learning more about fast-tracking your financial freedom, join one of our educational workshops: Fast-Track Your Financial Freedom.

Rupali

Your Independent Buyers Agent