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Reserve Bank of Australia holds interest rates - What It Means for Australia’s Property Market
RBA Holds Interest Rates: What the Cash Rate Pause Means for Australia’s Property Market in 2025
Following today's Monetary Policy Decision by the Monetary Policy Board, Reserve Bank of Australia, the following statement can be attributed to Oliver Hume Chief Economist, Matt Bell.
September’s cash rate hold has spilled over to the rest of 2025 on the back of a pretty ugly inflation number for Q3. Just over two weeks ago, markets were pricing in a nearly 80% chance of a cash rate cut today, but this was back below 50% before the inflation data and cratered to essentially zero after it.
Today’s decision was therefore of surprise to no-one, and all eyes now move past 2025 and into 2026 to answer the question of when (or even if) the next rate cut comes. Markets currently expect just one more rate cut by mid-2026, with a 50% chance of it coming by March.
What does the interest rate hold mean for property markets?
Property markets have benefited strongly from the three cuts delivered so far with October seeing the strongest house price growth in nearly 2½ years, and land markets increasing sales volumes and prices. It’s no coincidence that house prices started moving up again immediately after the February rates decision, and on balance, expectations of fewer cuts moderates the outlook.
But the fundamentals remain solid. Population growth remains one of the highest in the developed world, and we’ve built too few houses for decades. There’s plenty of money out there looking for a home, and even losing one more rate cut, credit remains readily available to purchasers. Even with unemployment rising to 4.5%, the jobs market remains strong, and households and consumers are spending more (ironically, one of the reasons why inflation remains persistent and fewer rate cuts are likely).
If I were a betting man, my money would be on the next cut happening in May 2026, and it not being the last one. The RBA probably needs a few quarters of good inflation data to cut again, and these come out at the end of January and April. But if inflation undershoots the 2.5% target mid-point, it could extend the rate cutting cycle past what market currently think.
