Will Interest Rates Fall in 2025? What It Means for the Capricorn Coast Property Market

Will Interest Rates Fall in 2025? What It Means for the Capricorn Coast Property Market

Since May 3, 2022, when the Reserve Bank of Australia (RBA) lifted the cash rate from a historic low of 0.1% to 0.35%, interest rates have been steadily rising, reaching a high of 4.35% today. This shift was part of the RBA’s efforts to combat rising inflation, which peaked at 7.8% in December 2022. However, with inflation now back under control at 2.4% by December 2024, the central bank’s tightening cycle may be coming to an end, with many experts forecasting a potential reduction in rates in the near future.

The next RBA meeting is just one week away, on Tuesday, February 18, 2025, and with inflationary pressures easing, the question on everyone’s mind is: will the RBA begin to reduce rates soon?

Inflation on Track to Return to Target

The RBA’s target inflation range is between 2% and 3%. After a sharp rise in inflation, which reached 7.8% in late 2022, it has steadily decreased, falling to 2.4% by December 2024. This decrease signals that the RBA’s rate hikes are having their desired effect and that inflation is coming back into the target range. With this moderation in inflation, the RBA may opt to pause or even lower interest rates in the coming months, providing some relief to borrowers.

While interest rates have been rising steadily for almost three years, the market’s resilience suggests that buyers and sellers are adapting. If the RBA takes a more dovish stance and starts reducing rates, it could spark renewed activity in the property market, especially in regions like the Capricorn Coast.

Low Housing Stock: A Key Factor for Buyers and Sellers

On the Capricorn Coast, housing supply remains a major factor influencing the local market. According to realestate.com.au, there are currently only 364 properties available for sale, making the region one of the most competitive markets in the country. Despite higher borrowing costs, limited inventory keeps demand strong, as fewer properties are available for buyers to choose from.

For those selling property, this scarcity of listings may mean a higher chance of attracting buyers, even in a high-interest-rate environment. As the saying goes, the market you sell in is the market you buy in. While rising rates can be a deterrent for some buyers, low stock levels continue to drive competition and prices. A potential rate cut could help balance the scales and ease pressure on buyers while sustaining strong demand.

What’s Next for the RBA?

Given that inflation is trending back toward the RBA’s target range, it’s increasingly likely that the central bank will reduce rates in the near future. A rate cut could offer relief to homeowners with variable-rate mortgages and could lead to increased buying activity as borrowing costs decrease. Buyers and investors alike should be keeping a close eye on the February 18th meeting, as the RBA’s decision will shape the economic landscape for months to come.

Ready When You Are

In the meantime, the Capricorn Coast property market continues to thrive despite the higher interest rates. With limited stock and a resilient local economy, now could be the perfect time to make your next move. Whether you’re looking to buy or sell, @ Real Estate is here to help. Our experienced team understands the dynamics of the local market and is ready to guide you through every step of the process. Ready when you are!