Five Rate Cuts? What That Could Mean for Property Prices in 2025

By Leigh Martinuzzi | Martinuzzi Property Group – eXp Australia

Property prices across Australia are stabilising—but let’s be clear, this means very different things depending on where you are. Some markets are still climbing steadily, while others have flattened out. On the Sunshine Coast, the election dust has now settled, and I’m starting to see a few more listings come to market. That said, we’re still facing a chronic shortage of stock—and when there’s not much to choose from, the demand builds. We’re already starting to see that play out again locally.

Meanwhile, there’s chatter that 2025 might just be the best year to buy property in Australia. Personally, I think that depends heavily on which market you’re in. Take Melbourne, for example—it’s its own unique beast right now. High listing volumes and softening demand. Complete opposite to what we’re seeing here on the Sunshine Coast where homes are selling quickly, competition remains strong, and we’ve had steady population growth over the past couple of years putting pressure on availability.

What really caught my attention this week, though, was the latest commentary from NAB’s chief economist, Sally Auld. She’s forecasting not just one, but five interest rate cuts. Starting with a potential 50 basis point cut in May, followed by four more 25-point reductions. That would bring the cash rate down to 2.6%.

Now, imagine that as a mortgage holder. That sort of drop could mean a monthly saving of around $526 on an average $600,000 loan. For existing homeowners and those already in the market, that’s a pretty big relief.

But as we’ve seen before, rate cuts don’t just improve affordability—they also stimulate demand. And when demand surges in an already under-supplied market like ours, prices rise. Simple economics. NAB is forecasting a 3.3% rise in capital city dwelling values this year and 5.6% in 2026. I still stand by my earlier prediction of 7% annual growth here on the Sunshine Coast, with some suburbs outperforming, especially those offering better affordability. Think areas like Nambour or parts of Palmwoods and Woombye.

That said, I believe we’ll see a shift later this year. As confidence returns to some of the larger southern markets, we’ll see renewed interest in higher-end homes and coastal lifestyle suburbs—especially from cashed-up southern buyers and investors chasing long-term gains. Outer suburbs of the sunshine coast might see a peak in prices with then more demand heading back toward inner suburbs on the Coast as prices align more closely.

So, do I welcome five rate cuts? As someone with a mortgage, absolutely. But if I step back and look at the broader market, it feels a bit aggressive. Especially when you consider we’re still dealing with low stock levels, sky-high construction costs, and limited new build activity. The fundamentals haven’t shifted. The cost to build remains unaffordable for many, and unless that changes, we’re unlikely to see supply catch up.

It’s no surprise first-home buyers have pulled back—and honestly, who could blame them? Saving a deposit, covering stamp duty, and keeping up with rising prices is no small feat, especially on the Coast. Even if interest rates drop, the increase in borrowing power won’t necessarily bridge the gap when home prices are still climbing.

What we are seeing is owner-occupiers leading the charge. This demographic often already owns property, has benefited from strong equity growth over recent years, and can therefore justify paying the higher asking prices we’re seeing. A couple of rate cuts and suddenly, trading up or downsizing makes more sense for them.

I might sound a bit pessimistic here—but it’s not doom and gloom. I actually think the RBA will take a more gradual approach. I’d be surprised if they rushed into five rate cuts without more data around inflation, consumer confidence, and the global economy. Maybe I’m missing something, and if I am, I’d love to hear your take on it.

Rental demand, meanwhile, is expected to keep climbing. As more buyers are priced out of the market, the rental pool grows. NAB’s latest survey suggests rental prices will keep rising, especially in regions where vacancy rates are already tight. And while the Labor government has rolled out some relief for first-home buyers—like the 5% deposit, no LMI, and no stamp duty on new builds—I question whether that’s enough to support long-term affordability and a comfortable lifestyle.

So, where does that leave us? In a familiar spot. Strong demand. Limited supply. A lot of talk around interest rates. And a real need for more housing options. For now, it’s steady as she goes—but if these rate cuts eventuate, I think we’ll see the market heat up even more in the second half of 2025.

If you’re thinking of buying or selling this year, it’s worth being prepared. Let’s have a chat. You can schedule a free consultation here. 

If you are in buying or selling mode I’ve also created this free resource – Sunshine Coast Home Sellers and Buyers Guide. 

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