RBA holds interest rates, unlikely to boost housing demand: CoreLogic

The Reserve Bank of Australia (RBA) has kept the cash rate steady at 4.35%, a decision that CoreLogic’s Research Director Tim Lawless says is unlikely to significantly impact housing market trends.

Lawless noted: “Although a stable interest rate decision is seen as a positive for borrowers and housing more broadly, we aren’t expecting today’s outcome will have a material influence on housing trends.”

The RBA’s decision to hold rates comes amid easing inflation, soft economic growth, and a gradual loosening in labour markets.

While stable rates and lower inflation could help lift consumer sentiment, Lawless suggests this may not translate into increased housing market activity.

“Recent growth in property prices has had more to do with low supply, tight rental conditions and demographic factors than sentiment through the housing upswing to date,” Lawless said.

He added that many of these factors are now losing momentum, with home sales easing as affordability becomes more challenging and migration slows.

CoreLogic’s national Home Value Index shows the pace of housing value gains is slowing, from 3.3% over the June quarter last year to 1.7% over the three months ending July 24.

Lawless suggests that even when interest rates start to fall, affordability pressures and a potential housing supply response may keep price growth in check.

The timing of a potential rate cut remains uncertain, with the earliest forecasts suggesting November, while market pricing points to February next year.

Lawless concluded that any future rate movements will depend heavily on inflation and labour force outcomes.