The Reserve Bank of Australia has kept the cash rate unchanged at 3.60%, taking a more cautious approach amid stronger household spending and a rise in inflation. With annual core inflation back at 3.0%, the top of its target range, the RBA signalled it will wait for clearer evidence of easing price pressures before moving again.
Even so, experts say rate stability is keeping the property market active, with solid competition, firm buyer confidence and ongoing price growth as summer approaches.
While the pause may postpone relief for mortgage holders, steady conditions are helping extend the spring selling season and sustain strong demand across key markets.
Domain’s Chief of Research and Economics, Dr Nicola Powell
“The RBA has clearly turned more cautious, which is quite a shift from the optimism we saw just weeks ago. Stronger household spending and a bounce in inflation are cooling hopes of a rate cut tomorrow.
“Consumers are spending again, which is great for the economy, but it also raises the risk of persistent inflation. Put simply, the RBA can’t move too quickly to cut rates, which will disappoint many hopeful buyers and mortgage holders. That said, markets are still pricing in a potential rate cut sometime next year.”
The Agency’s CEO of Real Estate Matt Lahood
Today’s decision by the RBA to keep interest rates at 3.60 per cent was no surprise after last week’s inflation data, says Mr Lahood.
“With auction clearance rates remaining consistently above 70 per cent in Sydney and Melbourne and a shortage of property listings in WA we expect that the market will remain buoyant.
“The market is driven, especially at this time of year, by people’s need and desire to secure a home prior to Christmas. There will be an increased urgency from buyers in coming weeks as the window of moving into a new home before Christmas closes. There is still an opportunity for families to find their dream home ahead of the new school year but this opportunity will also end soon.”
Nerida Conisbee, Ray White Group Chief Economist
The RBA has opted for caution in the face of a surprisingly strong inflation surge and a labour market that is clearly losing momentum.
“Last week’s inflation data delivered an unambiguously hot read. The Consumer Price Index rose 1.3 per cent in the September quarter and 3.2 per cent annually, the fastest quarterly pace since March 2023.”
The trimmed-mean inflation rate lifted to 3.0 per cent, its first increase since 2022, confirming that underlying price pressures remain broad-based.
“Much of the surge reflected the expiry of temporary energy rebates, with electricity prices up 9 per cent in the quarter and 23.6 per cent over the year. But inflation was not confined to utilities – housing, recreation and transport all posted strong gains, suggesting that price momentum has become more entrenched. This has shaken confidence that inflation will drift lower on its own, and it leaves the RBA wary of providing further stimulus.”
Bond markets were quick to respond, abandoning expectations of any near-term rate cuts.
“While investors now see the next move as a cut no earlier than mid-2026, the central bank’s near-term challenge is balancing this renewed inflation pressure with a cooling labour market. And as we have seen clearly, a surprise data announcement can quickly change the direction of rates.”
Mathew Tiller, J Hooker Head of Research and Business Intelligence
While new listings have lifted towards the end of the year, Mathew says they are still below average creating strong competition between purchasers.
“It is not just mortgage-holders hoping for a rate cut today; many sellers have also been waiting on the sidelines, holding out for another reduction in the hope it will create more momentum,” he said.
“Stable rates are a good thing as they provide buyers with some certainty to plan, and this keeps enquiry levels strong. It can be tempting to time selling your property with a rate cut, however, there are plenty of reasons to go to market now.
“Prices continue to edge higher, increasing month on month. Buyers are motivated as we head into summer, particularly families looking to lock in a new home before the start of the new school year. Investor activity is also busy as yields stay firm and vacancy remains tight.”
With inflation edging back above three per cent, Mr Tiller said the RBA will want to see clearer progress before making its next decision, even with a softer jobs market.
With global growth cooler, there is time to wait for clearer data.
“The risk at the moment is two-sided, holding off on further rate cuts will keep their options open for 2026,” he said.
“Despite household budgets continuing to feel the pressure, rate stability avoids extra pain. Recent cuts are still flowing through the market, and the RBA will want to see the full effect it has on the economy.”
REA Group Senior Economist, Eleanor Creagh
“The result was a material surprise, meaning the RBA will need clear evidence that inflation pressures are easing before cutting rates again. The Bank remains cautious and data-driven, but mindful that policy is already restrictive and the labour market is gradually cooling.
She explained that interest rates have moved lower this year, easing pressure on households and lifting confidence throughout spring.
That has helped extend the national upswing to a tenth straight month, with home prices now 7.5% higher than a year ago, the fastest annual pace since May 2024. Increased borrowing power, lower mortgage rates and improving sentiment are fuelling renewed competition.
“Keeping rates steady won’t derail that recovery. Earlier cuts and stronger confidence continue to support buyer demand, aided by population growth and the expansion of the Home Guarantee Scheme.
“With new supply constrained, these factors will keep upward pressure on prices, though affordability challenges mean the pace of gains is likely to remain slower than previous cutting cycles and vary across cities.”
Thomas McGlynn, BresicWhitney CEO
After a year of mixed signals in the property market, Sydney’s momentum has started to stall. Despite steady buyer interest and selective competition across quality listings, broader growth has yet to return in any meaningful way.
“The reality is that Sydney needs more movement on interest rates to unlock the next phase of growth. This has become clearer with each rate cut over 2025, in which short-term boosts have delivered little sustained momentum.
“In lieu of any immediate uptick today to sentiment or affordability, it’s certain that the present conditions will remain for the coming weeks and months with some buyers also pausing their plans until next year.
He says the current landscape will continue to be a mixed picture, with healthy competition for homes up to $2 million driven by first-home buyers and investors, but significant constraints in the middle market.
“Despite October being a record month for sales across Sydney’s lifestyle markets (BresicWhitney sales increased 38% year-on-year), the appetite for buyers to extend themselves isn’t as deep as in previous cycles.
“Properties between $3 million and $6 million are where we see the highest concentration of owners with substantial mortgages, meaning interest rates play a larger role in their purchasing decisions. We believe a new dynamic may emerge through 2026 where it’s easier to invest or enter the market than it is to upsize within it, until longer-term change is a reality in Sydney.”
With strong price growth present across other capital cities and the jump in inflation, he says it’s highly possible that the holding of rates over the short-term will see Sydney constrained by national monetary policy.
“This will influence activity and decision-making over the first half of 2026. It’s clear that a lack of affordability is starting to limit growth in Sydney, with annual growth in values below the national average.”
*Cotality data, Sydney 4.0% annual growth compared to 6.1% national average.
