How buyer activity is shifting in 2025

The Australian property market is once again shifting, and this time, the early signs point to renewed momentum in Sydney and Melbourne, while other markets remain on a steadier trajectory.

Following a sustained period of cooling in late 2024, the Reserve Bank of Australia's first rate cut in February has helped revive buyer confidence, but the impact has been uneven across the country.

To better understand how buyers are behaving post-rate cut and what lies ahead for 2025, we spoke with two leading buyer’s agents about Australia's shifting markets.

Sydney and Melbourne bounce back as buyers return

After months of steady declines, Sydney and Melbourne property prices saw a sudden turnaround in February, marking their first month of growth in some time.

According to Sydney-based buyer's agent Penny Vandenhurk, the Harbour City likely bottomed out around the end of 2024, and buyers returned from the summer break with renewed energy.

“When the market reopened in mid-January, there was talk of a rate cut, which helped give buyers some confidence,” she said. “The key driver for buyers at the moment is not wanting to wait until prices go up.”

The increased competition has been clear at auctions, where clearance rates have risen, more properties are going under the hammer rather than selling prior, and price guides are being exceeded.

“We’re seeing a significant increase in the number of registered bidders and higher sale prices compared to the price guide,” Vandenhurk said. 

“The market is no longer going down. It’s not racing away—we’re definitely not in a boom—but I’d say we’re in a balanced market that’s edging towards a seller’s market.”

The other capitals are seeing steadier activity

While Sydney and Melbourne have responded quickly, Brisbane and other cities haven’t experienced the same momentum shift. 

According to Queensland-based Pete Wargent, founder of AllenWargent Property Buyers, this is largely due to where different markets are in the property cycle.

“Historically, when interest rates go up, it impacts the more expensive quartile of the market the most,” he said. “That’s what happened in Sydney and Melbourne. 

"But the reverse is also true—when rates come down, it tends to benefit the more expensive markets first.”

That explains why Sydney and Melbourne have seen renewed energy from upgraders and equity-rich buyers, while cities like Brisbane, Perth and Adelaide are remaining steadier.

Another factor at play is that the rate cut’s real impact on borrowing power is minimal. According to Vandenhurk, the shift in Sydney isn’t about affordability—it’s about sentiment.

“One rate cut hasn’t changed affordability. It hasn’t meant someone can now afford a house, or that they can suddenly buy a three-bedroom instead of a two-bedroom,” she said. 

“But it has shifted the buyer mentality. At the end of last year, buyers were saying, ‘I’m going to wait because prices are in a downward trajectory.’ Now, after one rate cut, buyers are saying, ‘I want to buy now before prices go up.’”

Brisbane, Perth, and Adelaide, however, have affordability constraints that limit their ability to react to rate cuts in the same way. Wargent explained that these markets experienced significant price growth in 2023 and 2024, meaning many buyers are now feeling priced out.

“If you go look at a house listed at $1.3 million today and you saw it transact for under a million two or three years ago, there’s definitely a sense that you’ve missed the best part of the cycle,” he said. “That’s led to more caution, even though housing supply is still short.”

What types of buyers are driving activity?

While first home buyer activity remains steady, many are still constrained by affordability after a year in which entry-level homes were seeing ever-growing competition. 

But upgraders and other established homeowners are now beginning to make a move as well.

“When interest rates are going up, a lot of people just sit on the sidelines, particularly those with a lot of equity," Wargent explained. "But when rates start coming down, they suddenly reappear at all the auctions.”

Demand also remains high for properties in ready-to-move-in condition. Vandenhurk pointed out that many buyers today are unwilling or unable to undertake renovations, meaning homes that require significant work are struggling to sell.

“There’s still a large cohort of buyers who are in the category of thinking 'that property needs too much work for me,’” she said. “People are just walking in and saying, ‘It’s too much or too hard for us to renovate while we live there.’”

This is particularly affecting deceased estate sales, which have been coming onto the market in higher-than-usual numbers.

“We’re seeing a disproportionate amount of deceased estates on the market,” Vandenhurk said. “And many haven’t been renovated in decades. Buyers can’t afford to rent elsewhere while they renovate, so those properties are struggling.”

What’s next for 2025?

With an upcoming federal election and potential further rate cuts, what’s next for the Australian property market?

Vandenhurk believes the election could create short-term uncertainty, particularly for investors.

“A federal election always brings uncertainty, especially for investors, because negative gearing changes are often a discussion point,” she said. “I think we’ll see some investors just hold for the next couple of months to see what happens.”

As for interest rates, both Wargent and Vandenhurk expect only modest cuts this year, with limited impact on affordability.

“I think at most we’ll see one more rate cut this year,” Vandenhurk said. “But that won’t suddenly push a new group of buyers into the market.”

Wargent added that affordability is now the biggest handbrake on price growth in cities like Brisbane, Perth, and Adelaide.

“Brisbane was seen as relatively affordable a few years ago, but that’s not really the case anymore,” he said. “I think affordability is a constraint in all of those capitals.”

Despite these factors, Vandenhurk expects a stronger market by the end of the year.

“Sydney’s property market is incredibly resilient. Even when it falls, it doesn’t really fall,” she said. “I think the market will end 2025 stronger than it started.”

Wargent also predicts a relatively smooth year around the country. "We’ve had such a wild few years, but now things feel more balanced. Unless something unexpected happens, 2025 could be a steadier year," he said.

While the year ahead may not bring another property boom, conditions remain favourable for well-prepared sellers looking to capitalize on current momentum.