As we wave goodbye to 2024, many of us were hoping for a bright and shiny new year.
But let’s face it, 2025 might not be that fresh start we were dreaming of. Instead, it feels more like trying to shake off a financial hangover that bacon and eggs just can’t cure. So, what’s brewing for our wallets and the economy this year? Spoiler alert: Cheaper chocolate isn’t on the horizon.
Recession Risks: A Possibility
Right now, our economy isn’t exactly firing on all cylinders. The only thing keeping growth alive in 2024 was the influx of 500,000 new folks — migrants who decided to call Australia home. Now that the government’s capping that number, we might be staring down the barrel of a recession.
The job market is showing some tiny cracks but remains mostly solid, which is a relief. Nobody wants the stress of job loss, especially when there’s a family to feed. Let’s all cross our fingers that unemployment stays low in 2025.
Interest Rates: What’s Next?
Interest rates are on everyone’s mind. Rate cuts are coming, but how much? That’s the million-dollar question! Inflation just won’t let go, and it’s likely rate cuts won’t be as generous as we’re all hoping.
A little math by Compare the Market shows that trimming the cash rate by just 0.25% could shrink monthly payments on an average home loan by about $104, adding up to $1,248 a year. But don’t count on banks to automatically pass those savings on. Homeowners need to be proactive, hunting down better deals in 2025.
Property Markets: A Mixed Bag
The housing market hit its stride in 2024, especially in cities like Sydney and Melbourne. But don’t expect that momentum to carry into the new year. Brisbane, Adelaide, and Perth might still see some decent gains—SQM Research predicts Perth could jump 14-19% and Brisbane 9-14%.
Housing affordability remains a massive hurdle. A survey by Compare the Market shows 90% of aspiring homeowners feel they need family help to save for a deposit, yet a quarter of them say their parents can’t pitch in. Without more affordable housing, the gap between homeowners and renters will keep growing.
Superannuation and Politics: Unpredictable
Turning to superannuation, returns are up in the air with markets at all-time highs and Donald Trump back in the White House. Predicting what’s next for shares is anyone’s guess. Meanwhile, Aussies will head to the polls in May, after a challenging few years. The cost of living is biting, so look out for political parties offering sweet deals to win your vote. Whether we’ll see a change in government remains to be seen.
America Under Trump: Economic Gamble
Trump’s return might bring some economic fireworks. With a massive budget deficit, Trump’s approach to splash cash to boost the American economy is bold. His plans to boost jobs and manufacturing domestically, and cut taxes, are designed to keep Americans spending. But what does this mean for Aussie exporters? We could see some impacts on trade if U.S. tariffs rise. A thriving U.S. economy is good news globally, but Trump’s gamble will need to pay off for everyone to benefit.
So, as we dive into 2025, buckle up. The coming year is sure to keep us all on our toes financially. Whether it’s finding better mortgage rates or making the most of political promises, staying savvy and informed will be the key to navigating whatever comes our way.