2025 Housing Market Forecast: What It Means for First-Time Buyers

The desire to own a home has always been a weighty ambition for Australians. Notably, Melbourne's western coast and eastern suburbs have historically been regions where home ownership serves as a significant aspiration in every Aussie's eyes.

As 2025 approaches, shifting changes in South Australia's property markets and support schemes for primary buyers, which are making a huge difference, combined with additional homes entering the market and pricing stability, also present glimpses of new opportunities, this is what first-time buyers need to comprehend in order to plan wisely and capitalise on the available opportunities effectively, maximising what lies ahead.

What’s Beneficial to First-Home Buyers

1. Increased Availability of Homes

For some years now, first-time home buyers have been competing for an extremely limited market. But by the year 2024, there will be new developments and properties for sale in outer suburbs and regional areas. Thus, there's reduced competition and a higher likelihood of finding a home that suits your budget. For instance, South-East Queensland is witnessing the rapid construction of townhouses aimed at first-home buyers. These properties provide ample living space at a reasonable price.

2. Price Stabilization

Another positive is that prices are no longer increasing as they did during the COVID boom. While prices are still predicted to increase, the pace has now softened and is more stable, estimated at 2–5% growth, which is better for buyers. This slower elevation gives you the confidence to plan your budget since you’re not at risk of getting priced out immediately, but if you come across a property that meets your requirements and is within your budget, don’t wait for a so-called ideal price drop. Perfect homes tend to sell very fast, and you could lose them if you're not careful.

3. Interest Rates Have Stabilized

Interest rates, after undergoing a severe period of increases, have now reached a steady position. The Reserve Bank of Australia has kept the interest rates steady, providing some relief to buyers who were anxious about the repayment costs. Increased stability makes mortgage repayments easier to predict and increases the confidence of banks towards lending. Worrying about future movements is inevitable. If you are uneasy about the rate hikes, then locking yourself in a fixed-rate loan will quiet your nerves.

4. Increased Assistance for First-Time Home Buyers

The First Home Guarantee program allows the purchase for first-time home buyers with only a 5% deposit and removes the requirement to pay Lenders' Mortgage Insurance. Further, depending on residency, individuals may become eligible for the First Home Owner Grant (FHOG), which can provide $10,000 - $30,000 or receive significant stamp duty savings, resulting in a considerably reduced expenditure

Things to Consider When Buying Your First Home in 2025

Early savings can pay dividends later on. Starting to put money aside well in advance improves your position when applying for a mortgage down the line. Having a deposit of at least 20% will aid in lowering your Loan-to-Value Ratio as well as reducing Lenders' Mortgage Insurance costs.

Research the Market

Most buyers make the mistake of blindly jumping into the market. It is important to check the properties available, suburb profiles, and market trends beforehand. You can visit CoreLogic and Domain for detailed insights. Overpaying or underpaying is a risk that can easily be eliminated with good information.

Get Pre-Approved

When taking out a mortgage, getting your loan pre-approved offers numerous benefits, such as indicating to the seller that you are serious. Affordability is also clearer, as having a rough amount helps structure searches. This step can be crucial if you find a house you like and need to move quickly.

Get Pre-Approved for a Loan

Before you start scrolling through listings or heading to open houses, it's important to understand your budget. Sarah learned this the hard way after falling in love with a charming four-bedroom home, only to discover it was well outside what the bank would approve. Getting pre-approved saved John from the same disappointment; armed with his maximum, he felt confident making offers. Sellers also see pre-approval as a sign you're serious. It's a straightforward step that provides clarity.

Think About Future Growth

Even if the starter home isn't forever, consider location. The Johnsons bought in an up-and-coming area near a new light rail. Though modest then, five years later, their house appreciated greatly as restaurants and shops moved in. Meanwhile, the Williamses stayed put as their neighbourhood slowly declined. A bit of foresight regarding potential changes can yield rewards later on.

Stay Within Your Budget

When you finally find a place you love after a long search, it’s super tempting to rush. But don’t let your excitement cloud your judgment.

However, putting yourself in a financially compromising position can turn your dream of homeownership into a nightmare. Be sure to budget not only for mortgage repayments but also for ongoing expenses such as insurance, maintenance, and council rates. It's better to buy a home you can comfortably afford and really enjoy living in rather than stressing out every month just to keep the lights on.

Here are a few more thoughts to hold in mind as you enter into homeownership:

Look Beyond the Big Cities

If your goal is to own a home in a metro area like Sydney or Melbourne, that ideal may still appeal to you, but for many aspiring first homeowners, those cities are becoming increasingly expensive. The secret to solving the homeownership crisis is looking beyond the CBD.

Many buyers are looking at outer suburbs and regional towns, where prices remain affordable. Such areas might lack the fast-paced vibe of the city but tend to be lower-priced, quieter, and more spacious. Since remote working has become increasingly normal, living farther from the office is no longer a hindrance for many.

Future-Proof Your Home Search

An essential piece of advice when purchasing your first home is to consider future resale value. It is important to love the home you are buying, but also consider how easy it will be to sell when it comes time to move on.

Buy in an area with upward movement prospects. Seek out neighbourhoods that are home to a mix of young families, young professionals, and other first-time buyers. This is a good area that has potential for value growth. Also, consider local amenities and the Community A location, which has good schools, parks, shops, and public transport, which will always be desirable, regardless of the state of the market.

Know the Market Trends in Your Area

The property market is often highly regional, and conditions differ considerably from one area to another. Before you look at a specific suburb or town, learn the local market trends. And finally, in markets that have experienced a lot of price growth over the past few years, those prices may be evening out and creating significant opportunities for those looking to get into the market without the pressure of prices beginning to skyrocket.

Watch local auction clearance rates and sale prices to guide you to the market in individual suburbs. You can acquire this information from services like CoreLogic and Domain or by talking to local real estate agents with knowledge of the area.

With improved property availability, government assistance, and a more stable market, first-time buyers are in a good position to find a home that fits their needs. With some pre-planning, due diligence, and remaining open to various outcomes, you can confidently take this crucial step toward homeownership.

At ASK Financials, We specialise in making your first home purchase a great financial investment. Let us turn confusion into confidence with expert advice. Head over to our website, www.askfinancials.com.au. We will help you decide on the most optimal loan for you. Call us at 0433 944 055 now so we can set up a discussion about preferred loans, loan capacity, and flexible plans according to your budget. Book a free call for ask financials.