Australian House Prices Continue to Rise Amid Expectations of Further Rate Cuts

Australian house prices rose 0.6% in July for the sixth consecutive month, driven by speculation of further interest rate cuts. Brisbane, Perth, and Adelaide reported the strongest growth. Market conditions are positive for ongoing price growth through 2025 and 2026, with two or three interest rate cuts expected in the easing cycle.

Australian house prices rose by 0.6% in July, marking the sixth consecutive month of growth. This upward trend is largely driven by speculation that the Reserve Bank of Australia (RBA) will continue its interest rate easing cycle. Brisbane, Perth, and Adelaide reported the strongest growth, with market conditions remaining positive for ongoing price increases through 2025 and 2026 [1].

The RBA has already implemented two interest rate cuts this year, with expectations of two or three more cuts in the coming easing cycle. According to the Domain House Price Report for June, the median house price in Australia currently stands at $1,207,857. If the cash rate falls by 1.5% by early 2026, as predicted by Westpac, the median house price could jump to $1,320,000 [2].

While the interest rate cuts have boosted affordability for homeowners, they have also fueled competition among buyers, particularly first-home buyers. The Domain report notes that in the last 12 months, 120,000 first-homeowner loans were approved by banks, representing over 20% of all property transactions [1].

The RBA's recent interest rate cuts have had a significant impact on property prices in the past. For instance, in the 12 months following the first rate cut in February 2001, property prices jumped by 16.2% [2]. Similarly, the median price increased by 2.6% in the 12 months following the February 2020 rate cut.

However, the road ahead may be uneven. The Domain report forecasts that the market is poised for a more uneven trajectory, with supply remaining the key wildcard. The report suggests that without a substantial boost in new housing, price pressures will persist, particularly for well-located homes [1].

References:
[1] https://propertyupdate.com.au/latest-domain-house-price-report/
[2] https://au.finance.yahoo.com/news/dark-95420-property-cloud-looming-for-new-buyers-after-rbas-interest-cut-silver-lining-233600386.html