Buyers have responded to the Reserve Bank of Australia’s decision to cut the official interest rate by 25 basis points to 4.1%, as evidenced by a surge in numbers at open-for-inspections in February.

According to the latest data from Raine & Horne, open-for-inspections surged by 23% month-on-month in February following the rate cut on 18 February. Buyer demand was most substantial in Victoria, where inspections jumped by 41%, while NSW recorded a 31% increase. In the Northern Territory, groups at open homes rose by 21%; in Tasmania, they increased by 17%, 10% in South Australia, and 6% in Western Australia.

Raine & Horne also reports that national supply increased by 18% month-on-month as vendors responded positively to the rate cut. However, long-term supply lines may tighten as we move further into autumn, as appraisals were down slightly by 4.6% nationally month-on-month in February.

Angus Raine, Executive Chairman of Raine & Horne, said, “This rate cut is precisely what the property market needed. The pent-up demand we’ve been seeing since the end of 2024, combined with more affordable borrowing conditions provided by lower interest rates, will drive market activity this autumn.

Angus added, “With buyer demand remaining strong in many areas of Australia, vendors considering a sale in 2025 have a fantastic opportunity to fast-track their plans and list their properties this autumn.

“We are already beginning to see improvements in property values, with most capital city markets recording growth in February. Although appraisals have slightly stalled, this may lead to less competition.

“The combination of increased demand and reduced competition makes this autumn an ideal time for vendors looking to achieve a successful sale of their property.”

According to CoreLogic, real estate values in most capital cities and major regional hubs increased in February. The largest month-on-month change across the capitals was recorded in Melbourne and Hobart, both up by 0.4%.

The return to growth across Sydney and Melbourne, in particular, is driven by the more expensive end of the market, with upper-quartile house values leading to monthly gains in both cities.

To demonstrate the strength of the prestige market, award-winning Raine & Horne Double Bay/Bondi Beach successfully exchanged 11 properties between 16 and 23 February. Moreover, this surge in exchanges overlaps with significant legislative changes.

These changes include the upcoming 1 April ban on foreign property buyers and the density changes in NSW, which, along with rate cuts, contributed to market activity in Sydney’s prestigious Eastern Suburbs market.

New temporary buyer ban sparks urgency

Announced in mid-February, the changes will temporarily ban foreign persons, including temporary residents, from purchasing established dwellings for at least two years starting 1 April 2025 unless specific exemptions apply[i].

“We’re seeing more temporary residents looking to buy before the deadline, particularly from Asia,” said Ric Serrao, Director of Raine & Horne Double Bay/Bondi Beach. “There’s a misconception that non-residents from Asia are driving demand in our market, but most buyers hold temporary residency and want to secure properties before the restrictions kick in.”

According to Ric, another game-changing policy is the NSW Government’s Low and Mid-Rise Housing plan, announced on 21 February[ii] and took effect on 28 February. Designed to increase housing density within 800 metres of transport hubs and town centres, the new policy aims to deliver 112,000 new homes across the state.

“The changes in property regulations are significant in certain areas and highly relevant,” Ric said. “For instance, if you own land with R2 zoning, you previously could only build two strata semis. However, under the new regulations, you will have the opportunity to construct Torrens-title properties and small apartment blocks within that zoning.

“Developers are seizing these opportunities, and site values in key areas have surged by 20-30%,” Mr Serrao added. “Some agents are asleep at the wheel, but we’re proactively working with developers and property owners to capitalise on these changes.”

If you’re considering listing a property this autumn, contact your local Raine & Horne agent today.

[i] https://ministers.treasury.gov.au/ministers/clare-oneil-2024/media-releases/albanese-government-clamping-down-foreign-purchase

[ii] https://www.nsw.gov.au/ministerial-releases/low-and-mid-rise-policy-to-unlock-112000-homes-five-years