Falling inflation and Budget outlook offer some relief for home buyers, says REIA

The Real Estate Institute of Australia (REIA) has welcomed the latest Consumer Price Index (CPI) data, saying it signals a more favourable outlook for home buyers amid easing inflation and Budget forecasts supporting increased dwelling investment.

The CPI rose 2.4 per cent in the year to February 2025, down from 2.5 per cent recorded in both January and December, according to new figures from the Australian Bureau of Statistics. When excluding volatile categories such as fruit and vegetables, fuel, and holiday travel, the annual inflation rate was 2.7 per cent—also a decrease from January’s 2.9 per cent.

REIA President Leanne Pilkington said the results show inflation is trending down toward the Reserve Bank’s target range.

“Even allowing for the volatility of monthly CPI figures they are consistently trending down towards the RBA’s target range and are reflecting the Budget forecast of 2.5 per cent inflation for 2024/25,” Ms Pilkington said.

The data also revealed that rents rose 5.5 per cent over the past year to February, down from 5.8 per cent in January—the smallest annual increase since March 2023. The decline has been attributed to rising vacancy rates across capital cities.

“The figures support market expectations of further rate cuts during 2025 which would provide additional relief for borrowers following the cut in February and improve affordability,” Ms Pilkington said.

She noted that, combined with Federal Budget projections of increased dwelling investment over the next three years, the outlook for the property market was showing signs of cautious optimism.

“The most significant price rises at the group level were housing (up 1.8 per cent), food and non-alcoholic beverages (up 3.1 per cent) and alcohol and tobacco (up 6.7 per cent),” she said.