RBA Holds Rates Steady as Inflation Persists and Property Prices Surge

Good afternoon,

As expected, a massive week for property news. Cotality house prices for October, September building approvals and of course, the RBA decision on rates from Tuesday and the fallout, including their updated forecasts.

Highlights of the week:

As expected, the RBA held the cash rate steady at 3.6% on the back of the higher than expected September quarter inflation numbers.

The RBA updated their forecasts to have underlying inflation now staying above the target range for 12 months and not returning to the target band until the second half of 2026.

Markets have now trimmed back their expectations of future rate cuts. Many think the easing cycle is done, and financial markets have about a 50% chance of one more cut sometime before the middle of 2026 as the final rate cut. Much will depend on the next two inflation readings in late January and April.

Cotality House Value Index was released and showed dwelling prices accelerating in October. Melbourne prices rose 0.9% but still trailed the monthly and annual rises for Brisbane, Perth and Adelaide. National House price growth is now running at 6.1%.

September monthly building approvals saw a nice jump, but although it isn’t enough to change the recent flat trend, it does give some hope for an increase in new housing delivery in 2026. Approvals rose 12% on the back of a 26% jump in Unit approvals in NSW and VIC, but also saw the larger detached house sector rise a solid 4.4%

Have a great weekend!

Chief Economist

Matt Bell