RBA Rate Rise Impact on Property Market: What’s Happening Now?

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Strong Crowds, Softer Outcomes in Sydney’s East and Inner West

Over the past few weeks, since the 0.25% interest rate increase, I’ve been spending my weekends doing what I always do, walking through open homes, watching buyer behaviour, and attending auctions across Sydney. I’ve been particularly active in the Eastern Suburbs and the Inner West.

What’s stood out is that open home numbers still look strong, but auction outcomes and negotiation dynamics are telling a different story.

Strong attendance… but a growing disconnects.

If you judged the market purely by open homes, you could easily assume we’re back in a red-hot environment. In many cases, the number of groups through properties is still very healthy.

But the more time I spend speaking with buyers and sales agents, and watching auctions unfold, the clearer a pattern becomes

Seller expectations and buyer expectations are increasingly misaligned.

It’s not that buyers have disappeared. It’s that many are now more cautious, more value-driven, and far less willing to stretch especially when they feel pricing is based on yesterday’s market, not today’s conditions.

“hands in pockets” moments

I’ve been to a number of auctions recently where the energy at the start feels promising. Crowds are there, neighbours are watching, buyers are present , but when bidding opens, it’s noticeably quieter.

One auction in the Inner West really captured this trend. There were two qualified bidders, considered serious buyers who had clearly done their due diligence however neither placed a single bid. The property was passed in.

That moment says a lot about today’s market psychology:

• Buyers are still engaged and active

• They’re still inspecting and shortlisting

• But they’re increasingly prepared to wait rather than chase

In some cases, buyers would rather risk missing out than feel they’ve overpaid.

The vendor/buyer expectation gap is widening

I work closely with several major agencies in the Eastern Suburbs, and after speaking with a number of top-performing agents recently, the message has been consistent.

Vendors are often anchored to peak expectations, while buyers are anchored to current affordability and value.

Rate increases, especially after a period of heightened cost-of-living pressure don’t just affect borrowing capacity, they also shift sentiment. Buyers become more selective and more sensitive to price, and they begin to question whether “today’s price” will still hold six months from now.

That’s not fear it’s caution, right now caution is shaping outcomes.

The quiet rise of the postponed auction

Another trend I’ve noticed is the number of auctions being postponed.

Looking at last week’s auction schedule compared to the number that actually went ahead on Saturday, it was surprising how many campaigns were deferred rather than pushed through to auction day.

When I asked agents why, a common theme emerged

Postponing the auction can be a strategic reset especially when the vendor’s expectations need realignment.

In several cases, agents shared that by postponing, they were able to have more honest conversations with sellers, reposition pricing, and in a good percentage of cases, the properties then sold within 1–2 weeks after the original auction date.

That tells us something important and it’s that the market is still moving but it’s moving at the right price.

The debate is to postpone, or let the market speak?

One agent shared an observation that really stuck with me. He said he generally prefers to go to auction rather than postpone, because auction day is often the most powerful tool for showing a vendor what the market is truly willing to pay.

And there’s truth in that. For some vendors, no feedback is more convincing than an auction where the crowd is strong but bidding is thin. It cuts through assumptions and brings the conversation back to reality.

So there’s a tension right now in strategy:

• Postpone, reset expectations, and potentially sell shortly after

• Or go ahead, use the auction outcome as proof, and negotiate from there

Neither approach is “right” in every case. It depends on the property, the vendor, the reserve, the buyer interest and most importantly, how flexible the seller is willing to be.

What this means if you’re selling

If you’re selling in the Eastern Suburbs or Inner West right now, my view is simple

The market will reward good property but it won’t reward unrealistic pricing.

Buyers are still out there. They’re still attending inspections. They’re still prepared to compete. But they want confidence that the price reflects today’s conditions, not peak-market optimism.

The best results I’m seeing are coming from vendors who are:

• willing to price within the range of comparable recent sales

• open to adjusting strategy based on feedback

• focused on the outcome, not the headline number

In contrast, campaigns that stall usually share one thing in common and this is - expectations that haven’t caught up yet.

What this means if you’re buying

For buyers, this environment creates opportunity, but only if you’re informed and decisive.

Misalignment in expectations often creates:

• passed-in auctions

• longer negotiations

• properties re-emerging with adjusted pricing

• and occasionally, genuine value when a vendor becomes realistic

However, strong demand hasn’t vanished. The right property in the right location, priced correctly, can still attract competition quickly.

     The key is knowing when you’re looking at:

• a property that’s priced to sell

• versus one that’s priced to “test the market”

Final thoughts - it’s not a weak market , it’s a recalibrating one

The story I’m seeing isn’t a dramatic downturn. It’s more nuanced than that.

We have strong attendance at opens, but softer auction outcomes in many pockets. We have buyers watching closely, but not chasing. We have sellers still adjusting to what the market is now signalling.

In short, Sydney isn’t standing still. It’s recalibrating.

And in a recalibrating market, strategy, pricing, and expectation management matter more than ever.

Sydney has historically seen an average capital growth rate of 7.3% over the last 30 years and this is highly likely to continue despite the short-term recalibration process.

The key for most people is remembering that property is rarely a 6 to 12-month decision, it’s a 10-year decision.

Short-term shifts create noise, but long-term fundamentals and good decisions compound.

If you’re buying or selling and want a clear view of how your local pocket is behaving right now, feel free to reach out.

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