If there’s one thing my years in property have taught me, it’s that complacency is punished because when it comes to real estate, things can change in the blink of an eye.
And so it’s been with recent economic turmoil and interest rate rises. Step back to December 2025, and you’ll find most economists were tipping rates to hold. Some were even clinging to the idea of near-term cuts.
But all it takes is a run of stubborn inflation compounded by geopolitical uncertainty, and suddenly we’re all shifting in our seats. Thee rate rises have already taken effect this year, and for many buyers, that’s enough to shake their confidence entirely.
I understand the hesitation. I really do. But here’s the thing… stepping back from the market right now is probably the most expensive decision you could make.
Let's set the scene. The RBA moved three times this year, with 25-basis-point increases in February, March and May. This has taken the official cash rate to 4.35 per cent. That's 75 basis points of tightening in the space of four months. At its June meeting, the Board hit pause, leaving the cash rate unchanged for the first time in 2026. It was a unanimous decision, and it was widely expected.
But "pause" doesn't mean "pivot." Governor Michele Bullock was careful to keep the door open, noting the Board will do what's necessary, "including increasing the cash rate target further if required."
Three of the big four now predict cuts in 2027, with one outlier. CBA expects two rate cuts in 2027, pencilled in for May and August, taking the cash rate to roughly 3.85%. NAB sees three cuts in 2027 starting in the second quarter, ending the year around 3.6%. ANZ, the last to shift, now expects two cuts in the second half of 2027, also landing near 3.85%.Westpac remains the outlier. Having previously forecast three further hikes this year, it's still tipping two more rises, in August and September, which would push the cash rate to 4.85 per cent, which is a level not seen since the depths of the GFC.
So, while the most aggressive phase of this tightening cycle appears to be behind us, the banks aren't unanimous that it's over.
It’s no surprise that buyer sentiment has wobbled. But context matters enormously here, and a little perspective goes a long way.
The current rate environment is nothing like the shock cycle of 2022 and 2023. Back then, the RBA was lifting off an emergency floor of just 0.1 per cent – a record low that had lulled too many borrowers into a false sense of security. That move from 0.1 per cent to 0.35 per cent represented a tripling of the rate overnight. Each hike will hit harder than the numbers suggest at these low levels.
Today’s situation is fundamentally different. A further 0.25 per cent increase on a base of 4.35 per cent equates to a rise of around one-seventeenth, a fraction of the proportional impact buyers experienced three years ago. The cliff edge simply isn’t there this time.
Importantly, most owner-occupiers and investors have already been stress-tested at a three per cent buffer above their actual rate during the lending assessments of 2023 and 2024. In other words, the banking system has already priced in this kind of scenario. Many buyers have too.
When you look at all the evidence, property remains the ideal place to deploy your capital right now. That’s whether you’re buying a home or an investment. What we’re seeing with interest rates is a short-term blip on a long-term positive story.
The fundamentals driving this market are entrenched and show no sign of shifting. We have far too little housing for the level of demand. Renters across the country are weary of tight vacancy rates and relentlessly rising rents. They want off the treadmill and into ownership, which drives demand at the entry level, and pushes it up through the price tiers.
Immigration remains strong, and overall population growth continues to outpace new supply. And despite the federal government’s well-publicised ambitions through the National Housing Accord, which targets 1.2 million new homes by mid-2029, we are falling drastically short. Our own research at Propertybuyer projects that Australia could undershoot that target by as many as 462,000 homes, with fewer than 15 per cent of local areas currently on track to hit their share of the goal. Developers remain nervous, margins are tight, construction costs are elevated, and skilled tradies are scarce.
The Middle East conflict and the recently announced Federal Budget changes have had a dampening effect on the market, but these will likely prove short-term.
All of these forces, such as population growth, chronic undersupply, frustrated renters, and capped development, are far more powerful long-term drivers of price growth than any movement in the cash rate.
There’s another reason to feel confident about property right now, and it’s one that often gets overlooked: real estate is the ultimate hedge against a falling share market and rising inflation.
Unlike shares, property is an illiquid asset. You can’t panic-sell it on a bad Tuesday afternoon. That illiquidity, which some buyers see as a drawback, is actually a superpower. It forces you to ride out the short-term noise and stay focused on the long-term upside.
CoreLogic’s 30-year data from 1992 to 2022 recorded six distinct market cycles, including recessions, rate shocks, and global financial crises. Through all of it, national home values still rose by 382 per cent, or roughly 5.4 per cent annually. The smartest investors don’t try to pick the perfect moment. They buy the right asset and hold. Within one seven-to-ten-year property price cycle, today’s interest rate debate will be irrelevant. In two cycles? The question won’t even be remembered.
Bracing for rate rises isn’t about fear. It’s about being prepared and positioned to act. The buyers who will look back and smile are the ones who forged ahead beyond the bad-news noise and secured quality assets while others hesitated. What actually delivers results is selecting the best possible asset, securing it at the right price and under the right contract conditions, and then holding. That’s not a strategy that changes with the cash rate.
Achieving that outcome for you is where an independent buyer’s agent earns their stripes. We cut through the media headlines, focus on what matters and help our clients act with confidence when others are sitting on their hands.
Give us a call on 1300 655 615 to start a conversation about your next property purchase, or click here to send us your enquiry today.
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