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After two RBA rate cuts in 2025 — and more forecast before the year’s out — home buyers have suddenly found themselves in new territory.

They’re not just able to buy. They’re able to buy what they actually want.

For first home buyers, that might mean ditching the unit compromise and aiming for a townhouse or even a freestanding house. For upgraders, it’s a bigger block, better suburb, or that extra bathroom.

But with that extra capacity comes a new challenge: making sure what you want… is also what the market wants.

Just because you can borrow more doesn’t mean you should overshoot the value curve of the area you’re buying in.

In other words, your dream home still needs to make sense on paper.

You can borrow more. But use that power wisely.

Let’s look at what’s changed:

Two rate cuts have brought the RBA’s cash rate down to 3.85%, with fixed rates for owner-occupiers now available in the 5.29–5.49% range for strong applications.

That’s unlocking tens of thousands in extra borrowing power for many buyers.

Here’s a rough example:

With competition still moderate and grants still available (depending on the state), it’s a great time to act.

But before you hit realestate.com.au and go hunting for that “forever home,” there’s something you need to know:

Where you buy matters as much as what you buy.

One of the most common mistakes buyers make — especially with increased capacity — is stretching for the best home they can afford in the wrong suburb.

Let’s say you have a $1.3 million budget. You fall in love with a sleek, custom-renovated home in a suburb where the median price is $950K.

It feels like a win, right?

But here’s the problem: that suburb values homes at around $950K. That’s what most people are buying and selling at. So while your $1.3M home might have the extra bells and whistles, it’s now an outlier in a market that doesn’t support it.

If the market grows? Your home still grows… slowly.
If you need to sell? Buyers might look elsewhere, where their $1.3M goes further in a higher-priced suburb.
If you need equity? You might not have it — or not as much as you’d expect.

In short: your home has to swim with the current of its suburb’s value, not against it.

What smart buyers do differently.

They match the value of the home they want to the profile of the suburb that supports it.

So, if your budget is $1.3M and you want that lifestyle, you’re better off buying the “entry point” home in a suburb where the median is $1.3M–$1.4M, rather than the “top shelf” home in a $950K suburb.

Why? Because the market lifts all ships.
In a $1.3M suburb, most homes are being improved, renovated, landscaped, extended. That activity pulls your property’s value up naturally over time. You don’t have to be the best on the street to get a strong return — you just have to be on the right street.

What this means right now.

The key to buying well in 2025 isn’t just jumping on what you can afford.
It’s understanding the link between budget, location, and growth potential.

Here’s how to think about it:

• Step 1: Define your budget. Based on your income and new rate options, what can you safely borrow?
• Step 2: Define the kind of home you want. Is it a townhouse? A four-bed home with a yard? A knockdown with potential?
• Step 3: Find the suburbs where homes like that fit close to the median. That’s your shortlist.

Want to be in a $1.3M house? Look in suburbs where $1.3M is normal — not exceptional.
Want capital growth? Buy where value is rising because the whole suburb is improving — not just your individual home.

This window won’t stay open forever: why timing matters more than ever.

If there’s one thing the property market has taught us again and again, it’s this:

When interest rates go down, property prices go up.
And when they go up… they rarely come back down.

Let’s look at the numbers:

• In 2019, the RBA cut rates by 0.75%. National property prices rose 8.5% in 12 months.
• During the GFC (2008–2009), rate cuts triggered a 13%+ increase in values the following year.
• Right now, CoreLogic shows dwelling values rose 0.8% in May 2025 alone — and that’s the 17th month in a row of growth.

So while you might be planning to “wait and see,” here’s what you’re really doing:

• Waiting to borrow the same amount
• …for a more expensive property
• …in a more competitive market
• …with less government support (because schemes tighten as demand returns)

Translation? Waiting could cost you more than acting now — even if you feel cautious.

You can buy now. Just make it count.

Whether you’re stepping in or stepping up, 2025 is a rare window:

• Rates are easing
• Borrowing power is climbing
• Buyer competition is still light
• Government grants and stamp duty concessions are still available in many states

But that power is only useful if you use it wisely.

Want help working out what makes sense — not just what’s possible?

Book a Free 30-Minute Finance Strategy Session. with a Trilogy broker.
You’ll walk away with:

• A clear picture of what you can borrow based on today’s rates
• A smarter approach to location and property type based on your goals
• A finance structure that protects your future flexibility

This isn’t about spending more. It’s about buying smarter. And in 2025, that’s the real advantage.

This no-obligation free session is held with one of our experienced mortgage brokers. It’s not a sales pitch—just real, strategic advice tailored to your situation, so you can make smarter financial decisions.

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Trilogy Funding Two is a corporate credit representative (Representative Number 506131) of BLSSA Pty Ltd, ACN 117 651 760 (Australian Credit Licence 391237)

About the Author

Since 2008, David Thomas has built a business aimed at servicing the needs of property investors, owner occupiers and small business owners. David is recognised as one of the top 10 independent mortgage brokerages in the country, David and his team have settled almost billions of dollars worth of residential and investment loans over the last decade.

Known for his straightforward, relatable style, David believes by educating people about property funding; they fare better in the market. By sharing his expertise openly, some of the people he educates will likely become his clients. It's a win-win approach.

David Thomas is a credit representative (Representative Number 506153) of BLSSA Pty Ltd, ACN 117 651 760 (Australian Credit Licence 391237).