Media Release | RBA’s Latest Interest Rate Decision – May 2026

Rate Hike Statement

Even with the March quarter inflation data coming in slightly better than market expectations last week, and the trend of core inflation running just above the target band, the RBA today hiked the cash rate by another 0.25% to get ahead of any further increases.

Before the decision, markets had priced in ~70% chance of the hike, with all big four banks forecasting the increase.

We’re now exactly where we were before the three rate cutting cycle began in February 2025, with a wide range of forecasts about the rest of 2026.  Westpac has two more rate hikes forecast for 2026, while the other three big banks think this will be the last increase.

What does this mean for property markets?

Early signs are not as dire as initially feared.  We’re still seeing strong price rising in those already booming housing markets of Perth, Brisbane and Adelaide, and even in Sydney and Melbourne, where prices are easing, they’re still rising in the most affordable suburbs.

In the land space, March quarter volumes eased in those overheated markets, but this was because of supply constraints, with demand holding up well as indicated by strong price rises.  In Melbourne, volumes and prices held at late 2025 levels.

Other indicators have also held up.  Auction clearance rates and consumer sentiment are up off the lows seen at the start of the Middle East crisis. New home sales rose in March, and unemployment has held steady at historically low levels.

Clearly the outlook for property in 2026 is worse than it was before the crisis began, but with fuel prices well below their March peaks and supply largely sorted for Australia, it seems it will be a stabilisation in rate expectations that will settle the market before returning to normal activity in late 2026 or 2027.

ENDS

Media enquiries to:

Mitchy Koper
Oliver Hume
M.koper@oliverhume.com.au 
0417 771 778

Lilly Mackay
Oliver Hume
l.mackay@oliverhume.com.au