The Reserve Bank of Australia has cut the official cash rate by 25 basis points to 3.85%, marking a pivotal moment in the country’s monetary policy outlook and setting the tone for the housing market heading into winter.
According to a panel of senior economists and industry leaders, the move is expected to boost buyer confidence, improve borrowing capacity, and support moderate price growth — even as affordability pressures and global uncertainty persist.
From Trump-era trade disruptions to a growing housing supply shortfall, Australia’s top real estate commentators say the cash rate cut will have wide-ranging ripple effects on market activity, investor sentiment, and the pace of recovery for buyers and sellers alike.
REA Group Senior Economist, Eleanor Creagh
With the RBA cutting the cash rate by 25 basis points to 3.85%, Ms Creagh said both buyer confidence and borrowing capacities will be buoyed as interest rates continue to fall, helping to drive demand and home price growth.
“The rate cut offers some relief for borrowers, but affordability remains a challenge and sustained affordability improvements will depend on further reductions in the cash rate over time.
“At the same time, population growth and a persistent undersupply of new housing continue to underpin prices.”
Despite affordability constraints, Ms Creagh expect prices will keep lifting over the coming months, but the rate of growth is likely to be more modest compared to recent years.
“While inflation is easing, uncertainty around the global and domestic outlook remains high. The RBA reiterated that policy is not on a pre-set path and future moves will depend on incoming data.
“Trade tensions and volatility in global markets have escalated, reinforcing the need for caution and flexibility in setting policy. While the direct impact on Australia may be smaller, the broader implications for global demand and financial conditions are being closely monitored.”
Domain Chief of Research and Economics, Dr Nicola Powell
Today’s rate cut is a positive move for buyers and homeowners, said Dr Powell.
“At the last cut, we saw a noticeable spike in buyer activity – more people inquiring about properties, an increase in auctions, and stronger clearance rates.
“With these cuts and borrowing power improving, we’re likely to see house prices start to rise, especially in Sydney and Melbourne. For first home buyers, this could be a double-edged sword – while the rate cut helps with affordability, it could also fuel more competition in what’s already a very tough market.”
She said the expanded First Home Buyer scheme will also add to this, particularly in the unit market, where we could see prices push higher.
“This is likely to affect those looking at properties in the lower end of the market with more buyers entering the fray.”
Overall, she said we need to stay mindful of the long-term effects, especially when it comes to affordability.
“The challenge for policymakers will be finding the sweet spot between boosting growth and making sure housing doesn’t become even more out of reach for first home buyers.”
Ray White Chief Economist, Nerida Conisbee
Ms Conisbee said it was good news for mortgage holders as the Reserve Bank of Australia (RBA) cut the cash rate today by 0.25 per cent, and while the cut will be welcomed by many, it has been driven primarily by continued global uncertainty brought about by the election of Trump in the US.
“While extremely high tariffs put on US businesses and consumers will primarily impact local residents in that country, the impact on China specifically has the potential to impact Australia’s economic growth.
“In addition, while Australia is not a major trading partner with the US, supply chain disruptions and the potential for global pricing by US companies is likely to impact our inflation rate. This could be offset somewhat by lower prices for products out of China however the extent to which this happens is highly uncertain,” she said.
She said the cut comes at a time when Australia’s housing market is already demonstrating remarkable resilience.
“April data confirmed the acceleration of price growth that began in January, with house prices nationally rising by 0.4 per cent to reach a median of $917,433, representing an annual growth of 5.2 per cent.
“The unit market showed even stronger monthly momentum with prices increasing by 0.5 per cent to $685,637, delivering a yearly growth rate of 4.6 per cent.”
The Agency CEO of Real Estate, Matt Lahood
“With the election and an unprecedented period of disruption due to Easter and School holidays now behind us we return to a more normal real estate market,” said Mr Lahood.
The RBA’s decision to cut the cash rate target by 25 basis points provides certainly to consumers around their current and future mortgage payments.
“We expect a stronger than usual winter market which will lead into a very positive spring with improved confidence and a willingness to transact from buyers and sellers.”
BresicWhitney CEO, Thomas McGlynn
“The decision to cut interest rates is a positive for the property market,” said Mr McGlynn.
“After February’s rate cut delivered what was more of a ‘sugar hit’, this could represent more of a turning point, delivering results of greater impact and longevity.
While we have seen more stability due to the forming of Labor’s majority government, he said there is still a sense of ‘wait and see’ among some buyers and sellers.
“While reducing interest rates will deliver greater affordability, it also has the power to deliver an uplift in long-term price growth.
“Many sellers are aware of this. It’s likely those who are looking to time the market in pursuit of the maximum price for their home, will now be more open to participating.”
All in all, he said we should take confidence from RBA’s announcement and see it for what it is: an indicator of increased economic stability, with the potential to deliver a more balanced national property market that can accommodate the aspirations of more Australians.
LJ Hooker Head of Research, Matthew Tiller
A decision by the Reserve Bank of Australia to cut interest rates will bring much-needed relief to mortgage holders, strengthen buyer confidence and increase supply heading into the winter market, according to Mr Tiller.
While headline and underlying inflation are within the target range, the labour market is showing early signs of loosening, and household spending remains under pressure from the higher cost of living.
While the economy is still growing, momentum has slowed. The RBA has acted now to provide some forward support and prevent a sharper slowdown expected later in the year due to US tariffs on imports.
“After a long period of trying to get inflation under control, the RBA can be comfortable
reducing the cash rate,” Mr Tiller said.
“This is good news for the property market, and we will see confidence return by increasing borrowing capacity, improving serviceability, and putting more cash in the pockets of everyone.
“We’ve seen in the past that lower borrowing costs also encourages hesitant vendors to list, especially when they sense buyers are becoming more active.”
He said that while the decision by the RBA to reduce rates “won’t shoot the lights out in the market by any means”, as there are still affordability pressures due to recent price growth.
But, we should anticipate seeing demand pick up as confidence returns. With more cuts expected, buyers will be looking to get in before rates fall further and demand strengthens.
REIQ’s Antonia Mercorella
The Real Estate Institute of Queensland (REIQ) is welcoming the Reserve Bank of Australia’s (RBA) latest move to resume monetary easing, cutting the official cash rate by 25 basis points to 3.85 per cent – marking a return to the level last seen in May 2023.
REIQ CEO Antonia Mercorella said the rate cut would provide welcome relief for borrowers and much-needed stimulus for new housing supply.
“This cash rate cut is particularly critical for Queensland, where we’re experiencing above-average population growth and a pressing need for new housing construction,” Ms Mercorella said.
“With the Brisbane 2032 Olympic Games on the horizon, stimulating housing supply and infrastructure investment has never been more vital to ensuring the state is well-prepared to meet future needs – especially when the spotlight turns to Brisbane.”
Ms Mercorella said the cumulative impact of two 25 basis point rate cuts this year – today’s cut combined with February’s cut – would make a meaningful difference to borrowing capacity and mortgage savings.
“An additional rate cut is a welcome reprieve for homeowners, buyers, and investors,” she said.
“It provides breathing space for mortgage holders and encourages more Queenslanders to enter the property market.
“A variable mortgage holder with the average new owner-occupier loan in Queensland ($647,000) could see monthly savings of around $196 if the two cumulative 25 basis point rate cuts are fully passed on.
“Two rate cuts will also provide a boost to purchasing power – a single buyer on an average income could now afford around $20,000 more, while a dual-income household with two children could see an increase of approximately $30,000.”
She said investor sentiment, previously dampened by high borrowing costs, is also expected to be further bolstered by this second cash rate cut and the prospect of more to come.
Ms Mercorella said that while the second rate cut brings more relief, it must be complemented by longer-term housing policy action, particularly on the supply side.
“Unless all levels of government take urgent action to boost new housing stock, any affordability gains from lower rates will be undermined by persistent undersupply,” she said.
Oliver Hume Chief Economist, Matt Bell
“The RBA surprised no one by cutting the cash rate from 4.35% to 4.1%, an outcome widely predicted by economists and nearly fully priced into financial markets,” said Mr Bell.
He said this was the case since the December inflation print came in below RBA and market expectations. Partial data on rents, airfares, and fuel also supported this, pointing to a further easing in inflation pressures in January.
“This is a brave new world for property markets. Currently, the market has only two more 25bps cuts priced in for 2025, suggesting a historically gradual and potentially shallow easing cycle.
“However, this follows the most aggressive rate-rising cycle on record, at a time when a chronic undersupply has allowed prices to perform well across most markets.”
While this single rate cut won’t have a massive direct impact on affordability, he said the shift into the
easing cycle could have a more significant impact on activity, with consumers building potential future rate cuts into their housing budgets.”
