What a 20%+ Increase to Your Borrowing Power Will Mean for Property Prices in 2024-2026

Australian Property Talk

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We've modelled out borrowing powers for 7 years straight. This shows a close relationship between borrowing amounts and house prices.
In this episode, we deep dive directly into what will happen to borrowing powers in 2024.
We discuss 4 separate scenarios:

• Scenario 1 (near certainty): Stage 3 tax cuts kick in and add 5% to borrowing power
• Scenario 2 (currently forecasted by markets): Stage 3 tax cuts + 0.50% reduction in interest rates. Combined this adds 11% to borrowing capacities.
• Scenario 3 (uncertain timing of APRA change, inflation will likely need to come down): Stage 3 tax cuts + 0.50% reduction in interest rates + a 2% assessment buffer. Combined, this adds 21% to borrowing capacities.
• Scenario 4 (CBA’s rate forecast for 2025): Stage 3 tax cuts + 1.50% reduction in interest rates + a 2% assessment buffer. This scenario leads to a whopping 36% increase to borrowing power!

What will this all do to property prices? If Scenario 4 comes to life with employment markets remaining strong enough, its likely to bring forward the next leg up of the housing cycle to 2025-2026.

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