Today, the Reserve Bank of Australia (RBA) left the cash rate unchanged at 4.35%, signalling a cautious approach as it continues to assess the path of inflation.
While Australia’s annual Consumer Price Index (CPI) slowed in June, underlying inflation remained steady, suggesting price pressures are easing only gradually.
At the same time, the property market continues to soften as higher interest rates, affordability constraints and recent tax reforms influence buyer and investor activity.
Read today’s official statement on the RBA’s website.
Inflation may be moving in the right direction, but the RBA isn’t celebrating just yet.
Australia’s annual inflation slowed to 3.8% in the year to June, down from 4.0% in May. However, trimmed mean inflation, which provides a clearer picture of underlying price pressures, remained unchanged at 3.6%.
As a result, the door to further rate rises remains open. RBA Governor Michele Bullock recently said inflation remains too high and warned that additional increases in the cash rate could not be ruled out.
The property market is cooling
Higher borrowing costs, affordability pressures and softer investor sentiment are also influencing Australia’s property market.
A recent KPMG report predicts national house prices will fall 1.1% in 2026 before returning to growth in 2027. Units are expected to outperform, reflecting continued demand for more affordable housing options.
KPMG Chief Economist Dr Brendan Rynne said a combination of higher interest rates, cost-of-living pressures, housing affordability challenges and declining investor participation has materially changed the outlook, adding further uncertainty to an already cautious market.
“With the conflict in the Middle East catching us all by surprise, coupled with the unexpected Budget tax changes, the housing market is now much softer than we anticipated at the start of the year,” Dr Rynne said.
Conditions are expected to vary between markets, so it’s important to look beyond the national headlines when considering your next property move.
What does today’s decision mean for you?
Even with rates on hold today, reviewing your current loan can help you understand whether it still suits your circumstances and financial goals.
If you have an offset account, now is also a good time to check that it’s properly linked to your home loan and functioning as intended. Recent reports of offset account failures at several major banks have highlighted the importance of making sure these features are performing as designed.
Whether you’re paying off your current home, considering refinancing, looking to buy or thinking about an investment property, today’s decision is a good opportunity to review where you stand.
We can help you understand your current lending position, compare your options and work through what may be suitable for your circumstances.
The next cash rate decision will be announced on 29 September
Need help understanding what this announcement means for you? Contact us today.
