Rate cut welcomed as housing pressure mounts in Queensland

The Real Estate Institute of Queensland (REIQ) has welcomed the Reserve Bank of Australia’s decision to cut the official cash rate by 25 basis points to 3.85 per cent, bringing it back to the level last seen in May 2023.

REIQ CEO Antonia Mercorella said the rate reduction would provide relief for borrowers and stimulate new housing supply.

“This cash rate cut is particularly critical for Queensland, where we’re experiencing above-average population growth and a pressing need for new housing construction,” Ms Mercorella said.

She highlighted the strategic importance of housing stimulus with the Brisbane 2032 Olympic Games approaching.

“With the Brisbane 2032 Olympic Games on the horizon, stimulating housing supply and infrastructure investment has never been more vital to ensuring the state is well-prepared to meet future needs — especially when the spotlight turns to Brisbane,” she said.

The latest cut, combined with a previous reduction in February, represents a cumulative 50 basis point decrease in 2025, which Ms Mercorella said would make a meaningful difference to borrowers.

“A variable mortgage holder with the average new owner-occupier loan in Queensland ($647,000) could see monthly savings of around $196 if the two cumulative 25 basis point rate cuts are fully passed on,” she said.

The REIQ chief noted that the cuts would also boost purchasing power for prospective buyers.

“Two rate cuts will also provide a boost to purchasing power — a single buyer on an average income could now afford around $20,000 more, while a dual-income household with two children could see an increase of approximately $30,000,” she said.

The REIQ pointed to below-average home buyer activity, with 17,513 new owner-occupier loans in Queensland during the March 2025 quarter, compared to the historical average of 18,665.

Ms Mercorella said economic conditions supported the RBA’s decision, citing moderating inflation and relatively weak business conditions.

“Nationally, CPI inflation was 2.4% in the March 2025 quarter in annual terms, unchanged from the December 2024 quarter, while annual trimmed mean ‘core’ inflation came in at 2.9% in annual terms — both comfortably within the RBA’s 2-3% target band,” she said.

Despite welcoming the rate cut, Ms Mercorella emphasised that monetary policy alone would not solve housing affordability issues without addressing supply constraints.

“Unless all levels of government take urgent action to boost new housing stock, any affordability gains from lower rates will be undermined by persistent undersupply,” she said.

The REIQ analysis revealed significant shortfalls in Queensland’s housing pipeline, with only 37,300 dwellings approved over the past 12 months against an annual target of 49,000.

This pattern mirrors a national shortfall of more than 57,000 dwellings compared to the federal government’s target of 240,000 new homes annually.