Rising Australian Property Values & Falling Interest Rates: An Ideal Opportunity for Investors

For many Australians, the belief that property is a great way to build wealth is foundational. While real estate has its ebbs and flows – like any other market – history shows us property is a solid long-term investment in Australia.

Nick Melrose

Writer and Enthusiast

First Home Buyer, Investing

Understanding Australia's Housing Market Challenges

National property values are climbing again after a three-month dip over summer. The latest data suggests values rose 0.3% month-over-month in April, following a 0.4% rise in March. With predictions of more cuts around the corner this year, our cash rate could be lower than the current 3.35%.

The Big Four banks have forecast additional reductions from the Reserve Bank of Australia (RBA) that would bring down the cash rate to 3.35%, which means retail mortgages could fall into the 5% zone by the end of the year.

Australian property values have increased 39.1% since the start of Covid – a boom that’s not been matched for 25 years. This has resulted in an average property value increase of $230,000, delivering incredible growth of equity for many existing property owners. This equity can be unlocked to either upsize or further invest in Australian property.

Three of our cities – Brisbane, Adelaide, and Perth – currently command record-high prices. The biggest markets of Sydney and Melbourne are under their all-time best levels, but only by -1.1% and -5.4% respectively. Melbourne is emerging from a slump, attributed to state government changes to land tax and stricter rental reforms, which coincided with a spike in apartment supply. Many real estate experts suggest Melbourne now offers among the best investment opportunities for those looking for a mixture of capital growth, strong rental income, and attractive yield.

Current market conditions suggest this is an optimal moment for property investors and homeowners looking to build wealth through property to start planning to either expand their portfolio or upsize.

The critical element to your success as a property investor is the ability to track your expenses and build a plan for purchasing your next dream home or building a portfolio.

If you’re skeptical about whether Australian property prices could keep rising, it’s worth digging into the history books because the spike in values due to Covid is not unique. In the five years to March 1989, property values jumped 75.5%. Even this period was exceeded by the five years of growth to December 2003, when prices recorded a leap of 79.7%.

Similar to the Covid boom, these two 70%-plus booms were fuelled by a number of external factors. For example, the introduction of capital gains taxes (CGT) in 1985, with an exemption for primary residences, also drove an increase in owner-occupier demand in the late 80s. Values in Sydney rose 80.7% in that period.

CGT changes, the mining boom, and first-home buyer grants stimulated housing demand in the early 2000s. In the five years to September 2006, Perth values jumped 137%.

With interest rates predicted to fall through 2025 and 2026, now is the perfect time to assess your financial situation and discover new opportunities in the Australian property market.

By using ScaleApp to create your plan and track your progress, you will always be in control of your property journey.

Download ScaleApp today, and discover how it can set you on the path to achieving your property goals.

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