As we step into the new year, the real estate market has begun much like it has every February for the past two decades—brimming with renewed energy, eager buyers, and a strong sense of optimism.

In the past few weeks, we’ve seen impressive results, with properties selling before auction or expression of interest (EOI) deadlines. Competitive bidding at auctions has further reinforced buyer confidence, creating a ripple effect throughout the market. However, while there have been standout properties available, the overall supply of high-quality listings remains limited.

One key driver of this early-year momentum has been a well-timed interest rate reduction. This has provided agents with a compelling narrative for both buyers and sellers that now is a prime opportunity to make a move. Additionally, with Easter falling later this year, vendors benefit from nearly two uninterrupted months to execute successful sales campaigns.

A Market Full of Promise—But Not Without Challenges

Despite the strong start, underlying challenges remain.

Stock levels have increased, but much of the available inventory consists of ex-rental or ex-holiday homes, as well as properties requiring significant renovations to meet modern lifestyle expectations. Many of these homes are situated on main roads—less attractive to families and more suited to developers, a sector currently experiencing a slowdown due to rising costs. Additionally, buyers remain cautious about escalating construction costs, time delays, and the challenges of securing a reliable builder.

Adding to the complexity is the upcoming April 1st regulation banning non-residents from purchasing existing homes for the next two years. This policy change could shrink the pool of potential buyers, particularly impacting long-time homeowners looking to downsize.

While the recent interest rate cut has fueled some momentum, industry experts suggest that another reduction is unlikely before the latter half of the year. Meanwhile, the looming election could further dampen activity, as buyers and sellers often adopt a wait-and-see approach in times of political uncertainty.

A Long Pause Before the Second Quarter

Another key factor to consider is the unusually extended transition from the first quarter to the second. With school holidays beginning on April 5th, followed by Easter and Anzac Day, market activity could slow significantly until May. Once it resumes, distractions such as the footy season, colder weather, and thoughts of winter escapes may further impact buyer and seller engagement.

With so many variables at play, we remain cautious about whether the current surge in activity will continue. The market could shift into a more mixed environment for the remainder of 2025, with fluctuations in buyer confidence and demand.

For those contemplating a move, now may be the best time to capitalize on current market conditions before uncertainty takes hold. Staying informed and adaptable will be crucial for making smart real estate decisions this year.

Stay tuned for more insights as we navigate the evolving landscape of 2025’s property market!