2025 is shaping up to be a buyer's market for residential investors as the increase in home prices finally plateaus and starts to moderate.

The impact of the RBA's consecutive rate rises has finally started to bite as pent-up savings from the pandemic are drained. Data from the banks suggests that tax cuts are being saved rather than spent, which is a sign of consumer fatigue.

We'll see this manifest into weaker than expected Black Friday sales later this week and lower than expected Christmas spending when the figures are released in January.

That all paves the way for the RBA to contemplate and cut rates in early 2025. We think March is a live option, other major banks have pushed out to May.

Bottom line: The Sydney property market is a good forward indicator of where the economy is heading.

The prestige segment has been softening for some time, and now the mid-market is pulling back. The bottom end of the market will hold as long as employment is strong.

But the overall vibe suggests rate cuts are going to be needed soon and the RBA is aware that if it waits too long, it might be too late.

Market commentary and insights from Peter Esho, economist and founder at Esho Capital