The RBA Has Already Told Us What Would Stop the Next Rate Rise
By Leigh Martinuzzi of Martinuzzi Group – eXp Realty | Sunshine Coast Real Estate
I have been asked one question a lot lately. If house prices are falling, surely the Reserve Bank has to stop lifting rates?
It is a fair question. The answer is more interesting than a simple yes or no.
The RBA has actually addressed it directly. Most of the commentary I have read this week seems to have skipped that part.
So this week I want to go to the source, not the headlines.
What happened on 11 August
The Reserve Bank left the cash rate at 4.35% on Tuesday 11 August. That was the second meeting in a row on hold.
It follows the June pause. Before that came three rises this year, in February, March and May.
The decision was unanimous. But Governor Michele Bullock later confirmed the board weighed only two options. It was a hold or a rise. A cut was not on the table.
The board called monetary policy somewhat restrictive. Rates will stay put while it assesses how the economy is evolving. The board also repeated that it will do what it takes to bring inflation back to target.
The next decision is due on 29 September.
The part most people missed
There is a line in the risk section of the RBA’s August Statement on Monetary Policy. It answers the housing question head on.
The RBA lists a bigger than expected decline in housing conditions as a downside risk to inflation. In plain terms, if housing weakens more than forecast, inflation could come down faster.
So will falling prices change the RBA’s mind? Yes, potentially. Just not in the way most people assume.
The Reserve Bank does not act on house prices to protect property values. It watches housing because a weaker market flows through the economy. Less building. Fewer renovations. Softer retail spending. Eventually, fewer jobs.
Housing is a channel, not a target.
How far the market has already moved
The RBA gave its own read on this. Housing prices nationally have fallen 1.6% from their March peak. Auction clearance rates have dropped too.
That follows a long stretch of very strong growth.
The Reserve Bank put the shift down to three things. Cash rate rises. Tax changes announced in the May federal budget. Weaker sentiment.
The number that arrived this morning
Here is where it gets more pointed.
The RBA’s August forecasts have unemployment reaching 4.5% by December 2026. It then drifts up to 4.8% by the end of 2028. When those forecasts came out, unemployment sat at 4.4%.
This morning the Australian Bureau of Statistics released the July figures. Unemployment rose to 4.5%. Employment fell by 15,800 people. Markets had expected a rise of 12,000.
So the labour market has already hit the RBA’s December forecast. It got there four months early.
I want to be measured here. One month is one month. The ABS noted a smaller survey sample in July, which widens the margin for error.
The RBA also judged the labour market at 4.4% as still a little tighter than full employment. A move to 4.5% brings things closer to balance. It does not signal real weakness.
Even so, this is the clearest sign yet that the slowdown has spread beyond housing. Economists have already shifted their view on September.
Where inflation actually sits
Inflation is the constraint on everything above. It is worth being accurate here, because I have seen some loose numbers circulating.
Headline inflation eased to 3.9% over the year to the June quarter. That was well below what the RBA expected.
Trimmed mean inflation came in at 3.6%. That is the measure the Reserve Bank watches most closely.
The RBA does not expect inflation to reach the middle of its 2 to 3 per cent target until early 2028. Not late next year, as some reporting has suggested.
It also sees the risks tilted upwards. Oil and energy costs tied to the Middle East conflict are the main reason.
As at 5 August, markets priced a 50% chance of another rise this year. That was before this morning’s jobs data.
So here is the balance. Inflation says wait. Housing and now jobs say the brakes are working.
Putting the price falls in perspective
Cotality’s July index showed national dwelling values down 0.7% for the month. That is the largest single month fall since December 2022.
Combined regional values slipped 0.2%. It was their first monthly fall since January 2023. Regional Queensland was down 0.3%.
Those are real movements. They are also small ones, and the framing matters.
Brisbane values eased 0.6% in July. Over the same twelve months they were still 14.8% higher. The market now sits roughly 0.7% below its May 2026 peak.
A market that gives back half a per cent after a year like that has paused. It has not turned.
Cotality’s August chart pack made a similar point another way. It modelled what bigger falls would actually mean. Even a 20% drop would return Brisbane values to around August 2024 levels.
I am not suggesting anything of that scale is coming. Nobody credible is forecasting it. It is simply a reminder of how much ground was covered on the way up.
What this means here on the Sunshine Coast
Here is how I would read all of this locally. That includes Palmwoods, Woombye, Nambour, Burnside, Coes Creek and Mooloolah Valley.
The hinterland has never moved in step with national averages. I do not expect it to start now.
Regional Queensland easing 0.3% in a month is a change in pace. After the run this area has had, it is not a change in direction.
What underpins us locally has not shifted. Land supply is limited. Population growth across South East Queensland continues. Buyers priced out of the coastal strip keep looking inland for space and value.
Those forces are built into the region.
I am still watching enquiry levels and open home numbers closely. That is where a change shows up here long before it appears in any index.
I wrote a while back about why micro-markets matter more than ever on the Sunshine Coast. This is exactly that situation. The national story and the Palmwoods story are rarely the same story.
If you own and plan to stay put
This month changes very little for you. Your repayments are not moving because of an RBA decision. A softer market only becomes real when you sell.
It may be worth reviewing your loan though. A hold in the cash rate does not mean lenders are holding their own pricing steady.
The rate you pay may no longer be the rate available to you. For many households, that review is worth more than any headline about values.
If you are thinking of selling
Pricing strategy matters more now than it did six months ago. Recent comparable sales may no longer reflect how buyers are thinking today.
Presentation is doing more work too. Buyers have a little more time and a little more choice. Well prepared homes hold their position. Everything else negotiates harder.
Timing deserves a thought as well. Should the odds of a September rise keep falling, some buyer hesitancy may ease heading into spring. That is not a guarantee, but it is worth planning around.
If you are buying
You have more room than you have had in a while. Fewer competing buyers. Longer decision windows. More willingness to negotiate.
Borrowing capacity is still the constraint. Confirming your finance position before you start looking remains the most valuable step you can take.
If you are investing
Rents are still rising and vacancy rates remain tight. That supports the income side even as capital growth moderates.
Where a strategy leans on quick capital gains, the next twelve months may test it. Where it leans on yield and holding power, the fundamentals here have not changed.
Between now and 29 September, the data worth watching is inflation and employment. Everything else is commentary.
If you are weighing up a move over the next six to twelve months, it may be worth getting a clear read on where your property actually sits, rather than working from a headline or a neighbour’s sale from last year. A short conversation can give you a lot more clarity before you commit to anything.
Get in touch with us today and and let’s give you fantastic results that you deserve.
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