Big boost to homes for sale as interest rates come down

There were more new property listings in March in almost all the capitals compared to a year ago, according to the latest REA Group Listings Report.

Big rises in the number of new listings compared to last year were recorded in Adelaide (up 27.3%), Sydney (up 17.7%), Perth (up 17.3%), Canberra (up 16.5%) and Melbourne (up 13.5%).

The number of new listings across Australia was up 6.1% compared to March last year.

The rise in homes for sale came after the Reserve Bank of Australia cut interest rates in February, with further cuts anticipated this year expected to support home price growth.

“Both Sydney and Melbourne have seen a run of strong activity in 2025 so far, suggesting continued vendor confidence amid rising home prices and falling mortgage rates,” said REA Group executive manager of economics Angus Moore.

“Nearly all capital cities recorded more new listings this year than last,” he said. “Brisbane was the only exception, which saw new listings fall 5.5% year-on-year. This was likely due to cyclone-related disruptions.”

“Activity in regional areas was more subdued, with new listings down 4.6% relative to March 2024.”

While new listings were higher than in last March, comparing the number of listings with the same period last year is a little clouded by the timing of public holidays last year, Mr Moore said.

“The strong growth compared to a year ago partly reflects that Easter fell in March in 2024, while it will fall in April this year,” he said. “This would have subdued housing market activity at the back end of March last year.”

More homes to choose from as borrowing power increases

March was the first full month after the RBA cut interest rates at its board meeting in February – the first time rates were cut since late 2020.

The official interest rate was lowered by 25 basis points to 4.1% in February, with the move coming after data showed inflation was returning to the target band of 2-3%.

Multiple rate cuts before the end of the year are now widely predicted, which could lift both home prices and the number of properties being listed for sale.

Buyers have been feeling more confident as a result of interest rate cuts, increased borrowing power and a rise in the number of homes hitting the market. Picture: Julian Andrews 

“Rate cuts tend to support confidence, though of course the broader environment in which those rate cuts are happening matters as well,” Mr Moore said. “But all else equal, lower rates will support home prices and housing market conditions.”

Real estate agent Dib Chidiac from Sydney's inner west said February's rate cut had helped improve sentiment among both buyers and sellers.

“It does help with transaction confidence in terms of people wanting to buy because rates are going to be lower not higher,” he said. “Those that sell assume people will pay a better price.”

Mr Chidiac said buyers had more listings to choose from this year compared to last, but the run of public holidays in April and the upcoming federal election in May had caused a temporary slowdown in listing volumes in the past fortnight as homeowners pushed back plans by a few weeks.

“From May 3rd onwards we're going to see a bit more stock, and hopefully with interest rate cuts a bit more activity,” he said.

The total number of homes for sale in Perth is up by more than 13% compared to a year ago, giving buyers more homes to choose from. Picture: Getty

Listings uplift gives homebuyers more choice

Buyers overall have more properties to choose from compared to a year ago in most cities, with total listings up 6.8% in the capitals and 4% at the national level. 

The biggest rises were recorded in Canberra (up 17.3%), Sydney (up 13.4%), Perth (up 13.3%) and Adelaide (up 11.3%). 

Total listings rose a little in Melbourne (up 3%) and Hobart (up 1.8%) and remained flat in Brisbane, while there were 28.1% fewer homes for sale in Darwin than a year ago.

The increased choice for homebuyers came as consumers reported feeling more confident about buying a home off the back off interest rate cuts.

Research from Westpac showed an improvement in homebuyer sentiment in March, with the bank’s ‘time to buy a dwelling’ index rising to the highest level since September 2021.

However, Westpac notes this improvement in sentiment was reversed earlier this month amid the uncertainty of the tariff war and share market declines.

Property prices tipped to rise as rates come down

Economists widely expect interest rates to be cut when the RBA next meets in May, with Westpac head of Australian macro-forecasting Matthew Hassan predicting the worsening global economic outlook and declining inflation will force the RBA to act.

“Westpac expects the deteriorating external situation, which has had a clear bearing on this month’s weaker sentiment read, and further evidence of a sustained slowing in inflation will see the board deliver a further 25 basis point rate cut at its May meeting,” he said.

The high likelihood of a May rate cut is a view shared by all four big banks, with NAB even predicting a double-sized 50 basis point cut in May due to US tariffs weighing on the outlook for both global and domestic growth.

May’s meeting will follow the release of all-important quarterly inflation data, which could confirm that inflation has reached the RBA’s target band.

Economists at the big four banks expect RBA governor Michele Bullock to announce a cash rate cut at the central bank's May meeting. Picture: NewsWire / Jeremy Piper

Minutes from the RBA’s meeting earlier this month, held before the announcement of US tariffs, said “the May meeting would be an opportune time to revisit the monetary policy setting with the benefit of additional data about inflation, wages, the labour market and trends in economic activity.”

The central bank will also review a fresh set of economic forecasts next month, and will have further information about the likely evolution of global trade policies, the minutes stated.

NAB expects three further 25 basis point cuts this year in July, August, November, with another cut to come in February next year.

“We think the distribution of risks to both growth and inflation in Australia have shifted such that the central bank is required to act with some sense of urgency,” said NAB Group chief economist Sally Auld.

ANZ expects three 25 basis point cuts in May, July and August, while CBA is predicting cuts in May, August and November.

The latest PropTrack Home Price Index shows property prices increased in March, building on gains in February after a slow end to 2024 when prices retreated a little.

Property prices rose 0.3% nationally in March, with Sydney and Canberra recording the largest gains of the capitals (both up 0.5%). 

When broken down by property type, Melbourne recorded the largest gain for units (up 1%), while houses were up most in Canberra (up 0.7%).

Improved buying power as a result of rate cuts, combined with strong population growth and a housing shortage will cause prices to keep lifting, but stretched affordability will keep price growth tempered, REA Group senior economist Eleanor Creagh said.

“We expect prices to keep lifting over the coming months, but the rate of growth is likely to be more modest compared to recent years,” she said.