RBA Rate Call: What Happens Next for Property?

For the second time this year, the RBA has kept the cash rate unchanged at 4.35 per cent, providing some welcome stability for households and the property market amid ongoing mortgage pressure and elevated living costs.

The decision was widely anticipated, with major banks and economists expecting the RBA to hold rates following the latest inflation figures and consideration of broader global economic conditions.

The June-quarter Consumer Price Index (CPI) rose by 3.8 per cent, easing from headline inflation of 4.0 per cent in May and 4.2 per cent in April. This was also significantly below the 4.8 per cent inflation rate previously anticipated in the RBA’s May Statement on Monetary Policy.

Importantly, the RBA’s preferred measure of underlying inflation, the trimmed mean, remained at 3.6 per cent. While this represents an improvement from previous peaks, underlying inflation remains above the RBA’s target range of 2–3 per cent.

What does this mean for property?

For buyers, the rate hold provides greater certainty and reinforces the possibility that the interest-rate cycle may have entered a more stable phase. This could create a window of opportunity for buyers who are ready to act, particularly before any future reduction in rates potentially increases competition and pushes prices higher.

For investors, greater interest-rate stability can improve the predictability of holding property. Combined with strong rental growth and tight rental supply, this may encourage existing investors to retain their properties rather than sell, while improving the appeal of residential property as an investment.

For sellers, stability is also a positive development. Greater certainty around borrowing costs can improve buyer confidence and encourage more serious purchasers to enter the market. With the traditional spring selling season approaching, vendors may find conditions increasingly favourable for presenting their properties to the market.

Could rates rise again?

Despite the current hold, the outlook is not without risk. Underlying inflation remains above the RBA’s 2–3 per cent target, meaning another rate increase cannot be completely ruled out.

Financial markets remain sensitive to future inflation data, and the direction of interest rates will ultimately depend on whether inflation continues to moderate or proves more persistent than expected.

At present, all four major banks are forecasting the official cash rate to remain at 4.35 per cent over the next 12 months, with expectations of a first cut in August 2027.

A potential turning point for property

Across Australia, housing conditions are expected to remain relatively subdued through the second half of the year as the impact of earlier rate increases and recent tax changes continues to work its way through the economy.

However, there are signs that the market could approach an important turning point towards the end of this year or early next year.

If interest rates remain stable, inflation continues to moderate and economic uncertainty begins to ease, buyer confidence could gradually strengthen. At the same time, ongoing rental growth and limited housing supply continue to provide support for property values.

For property buyers and sellers, the key message from the latest RBA decision is stability. After several years of significant interest-rate and economic uncertainty, a more predictable environment could provide the confidence many participants in the property market have been waiting for.