But Owen stressed that the ranking is more meaningful than the modelled change,which is based on the 2010s when interest rates were lower and affordability was not yet as pressing.
The modelling is based on three periods from 2014 to 15,2015–16,and 2018–19,observing a steady rate environment for five to six months and then observing how property values changed under falling interest rates for about the same time period.
Interest rates are unlikely to fall back to their pre-COVID lows,which would moderate future price growth compared to the booms of the 2010s,she said.
She added areas with a relatively high concentration of investors could be particularly sensitive to interest rate changes as well,even if they were not so expensive,such as Parramatta.
Higher interest rates have reduced how much money home buyers can borrow and spend at auction,which has put downward pressure on property prices overall. But the effect has been uneven:buyers who cannot borrow as much as they hoped have looked away from affluent suburbs and towards more affordable areas,decreasing competition in the former and increasing it in the latter.
The Reserve Bank will meet on February 18 to decide whether to cut the cash rate from its decade-high of 4.35 per cent.
At this weekend’s auctions,sentiment was more upbeat than in the final months of 2024,as buyers hoped for imminent interest rate falls and tried to purchase a property before rate cuts pushed prices higher again.
Nick Johnstone,director of an eponymous real estate agency in the affluent Melbourne suburb of Brighton – in the Bayside area,which is forecast to rise – said he could already see buyer sentiment shifting.
“Since we’ve come back on January 6,there’s been a lot of properties we sold in January that were carried over from last year,” he said. “There’s been a lot more positivity with buyers,and there’s been a lot more through open-for-inspections.”
Johnstone said he’d noticed more first home buyers being pushed to purchase a property by their parents,who often tipped in cash to get them over the line. “There’s a lot of that going down where parents think it’s a great time to buy property,” he said.
“We’re also getting a lot of investors from interstate.”
The market had already improved since the end of last year,Johnstone said. “Late last year was really tough,but now people are thinking interest rates are going to come down … they’re getting a bit bullish.”
In Sydney,high-profile auctioneer Damien Cooley of Cooley Auctions said the group’s early auction results have been very strong.
“People are looking to try to get into the market before we see any significant impact of interest rate cuts,” he said.
Buyers are hoping for a rate cut.Credit:Steven Siewert
He has tracked that there are more bidders per auction,higher prices paid above reserve and more people inspecting properties than late last year.
He has been fielding phone calls from agents trying to bring their auctions forward due to buyer interest and watching parents help their children.
“Living in Sydney,people understand that while the market might stay relatively subdued for a short amount of time,and in some cases it may even contract a little bit,the general trajectory of the Sydney property market is up,and when you can afford to buy,you buy.”