Let’s face it economic news doesn’t always sound exciting. But it plays a big role in shaping interest rates, home loan repayments, and even property prices.
Recent data shows things might be looking up for the Australian housing market. While we’ve been feeling the pressure from higher interest rates and the rising cost of living, there are signs that better days could be ahead.
A Quick Look at the Numbers
According to the latest figures from the Australian Bureau of Statistics (ABS), Australia’s economy grew by 0.6% in the last quarter of 2024, and by 1.3% over the year. While the growth isn’t huge, it’s still a step in the right direction.
The ABS said this growth came from a mix of public and private spending, along with a boost in exports.
Another key figure is GDP per person (GDP per capita) — which rose by 0.1%, after seven quarters of decline. This might sound small, but it’s the first positive sign in a while.
What Falling GDP Per Person Really Tells Us
Even though the overall economy is growing, GDP per person has been falling for some time. This means that, on average, people aren’t feeling better off. Everyday costs like groceries, rent, energy bills, and mortgage repayments continue to rise, but what we’re earning or able to spend hasn’t kept pace.
Spiro Kolokithas, Managing Director of What If We Finance, explains:
“Falling GDP per person shows that many people are still feeling the pinch. The cost of living keeps going up, but everyday Australians aren’t seeing the benefits of economic growth in their own lives.”
So, while the economy might look fine on paper, these figures help explain why it still feels tough for many households — including those trying to save for their first home.
Household Spending and Savings
Household spending rose by 0.4%, mainly on essentials like rent and healthcare. Electricity rebates helped ease power bills, and people also spent more on things like shopping events, hospitality, and entertainment.
There was a small lift in the household savings rate, which moved up to 3.8%. People are still trying to set money aside where they can — even if it’s just a little.
What This Means for Home Loans
Spiro Kolokithas says these signs of steady growth could help bring confidence back to the housing market — especially for first home buyers who may have been holding back due to higher interest rates or affordability concerns.
“If this trend continues, we might see more buyers re-enter the market — even some investors who’ve been holding off for a while.”
While refinancing activity has slowed recently, improving conditions may help lift that side of the market too. A trusted mortgage broker can help buyers and homeowners make sense of their options and secure better outcomes as the market shifts.
So, what could happen with interest rates?
Some experts believe the Reserve Bank of Australia (RBA) will need to cut rates to support household spending. Commonwealth Bank’s Gareth Aird thinks a cut of up to 75 basis points may be needed this year.
But not everyone agrees. ANZ’s Head of Australian Economics, Adam Boyton, has suggested any rate cuts could be smaller — or possibly none at all if inflation remains sticky or wages stay strong.
This just highlights how uncertain things really are.
Even the experts can’t seem to agree. Some are forecasting a bigger drop in rates, while others see only minor changes ahead.
Spiro Kolokithas sums it up:
“There are a lot of opinions out there, and they don’t all line up. That’s the challenge right now — the data is sending mixed signals, so it’s hard to know what’s really coming next.”
For now, most expect the RBA to hold rates steady in April, with a possible small rate cut later in the year — but nothing is set in stone.
Final Thoughts
Even though some of these numbers sound technical, they have real-world impacts — on interest rates, loan repayments, and property prices.
If the economy continues to improve and rates begin to ease, 2025 could bring better opportunities for homebuyers, first home buyers, and homeowners considering a move or refinance. Speaking with a mortgage broker can be a smart way to stay ahead and make informed decisions as the market shifts.
