RBA Cut Hopes Crushed: Is Australia’s Property Party About to End? | EP108

In September, as expected, Australia’s housing market kept surging. Many people who never planned to buy have started researching properties. But beneath the surface, the ABS numbers on inflation, jobs, and population are all pointing in different directions. The outlook is getting murkier. And with the big four banks collectively winding back their forecasts for future rate cuts, the market—while celebrating rising prices—is also sensing a change. How long can this property market heat last? What forces are shaping the next RBA move? In this episode, we’ll break down the Australian property market’s performance in September, read the economic signals, and try to map where things are headed. Most importantly, we’ll help property buyers get ready for what’s about to change.

August Market Gains Accelerate

Let’s go straight to the numbers. In September 2025, Australia’s property market kept the recent trend going, rising 0.8% for the month—now eight straight months of accelerating gains. After the national index dipped 0.1% in December 2024, it entered a crucial rebound phase. January, February, and March all picked up pace. Growth eased a bit in April, mainly due to election uncertainty and the fading impact of the February rate cut. As the election settled and another cut arrived, the market climbed again in June. July was flat as the cut’s effect wore off. Then the August rate cut drove September’s faster rise. You can see a clear upward cycle.

Sydney rose 0.8% in September—same pace as August. It didn’t accelerate, but the monthly gain is already sizable. Melbourne’s trend was a little softer: up 0.5% in September, a bit faster than August’s 0.3%. If it breaks the 0.5% level, Melbourne will also enter a clear upswing.

Brisbane, Adelaide, and Perth have all been climbing for more than two years. Their pace bottomed in February this year, but even then they were still rising. Since then, they’ve accelerated for seven straight months. Brisbane gained 1.2% in September, matching August—very strong momentum. Perth rose 1.6%, with even more pronounced acceleration than the other two mid-sized capitals.

Adelaide rose 0.9%—no acceleration, but still a solid jump. It’s obvious: Brisbane and Perth have completed a V-shaped rebound without ever going negative, just as we forecasted last November. I’m curious whether those who’ve worried for two years that these three mid-sized cities had already peaked ended up buying, because the rise has continued.

This time, the three smaller capitals are moving a bit differently. Hobart hasn’t formed a clear uptrend—over the past two years it’s been choppy—but the overall direction is improving. Darwin’s surge continues: up 1.7% in September, the wildest of the eight capitals. Canberra eased a little to 0.7% this month. Overall, Darwin and Canberra are especially sensitive to rates. When cuts land, they jump; when cuts pause, the pace pulls back a bit. That’s also tied to their market size and price levels—especially Darwin. With the lowest median house price in Australia, even a small rate reduction helps buyers at that price point more.

That’s the month-by-month snapshot across the capitals. For trend, the best way is still the 90-day moving average. Stretch the price movement to a quarter and the noise calms down, making the direction clearer. On the chart, it’s obvious: the large and mid-sized capitals are already in an upswing. Hobart, which used to bounce around, is now in an upswing as well.

The five green circles on the chart mark the times I made market calls over the past five years. All five were right.

As of this episode, prices in Sydney, Brisbane, Adelaide, Perth, and Darwin have all reached record highs. Melbourne sits 2.7% below its March 2022 peak, Hobart is 9.5% under, and Canberra is 3.9% under. Our view is that Melbourne and Canberra will likely hit fresh records by the end of the first quarter next year at the latest. That’s when things get interesting: seven out of the eight capitals at all-time highs.

Right now, some buyer’s agents who only work the Melbourne market are saying, “Don’t buy in Brisbane, don’t buy in Perth—those are at records. Melbourne is cheaper, so buy here.” When Melbourne makes new highs next year, you can imagine the pitch changing again. In short, they’ll always find a way to say other cities aren’t good—only Melbourne is.

From a business angle, promoting what you sell is understandable. The problem is many clients can’t tell what’s marketing and what’s fact. Social media is flooded with messages. New property sellers say new homes are great and rubbish old ones. Buyer’s agents say established homes are great and trash new builds. Buyer’s agents who only cover Melbourne say only Melbourne is worth buying and every other city isn’t. Those who only chase low-priced established stock say only cheap second-hand is best and mid- to high-end isn’t. At the end of the day, most of this content is just promotion. They’re not wrong to say it—but if you believe them, that’s on you. Selling new builds on social media doesn’t draw big traffic, so the voices you hear most are buyer’s agents—Sydney, Melbourne, Brisbane, you name it. Our firm may be the only one in the property industry that isn’t limited by geography or property type. We cover the whole country and both new and established homes. There’s no need to force a narrative about which city or which type is “best.” If something’s good, we say it’s good—plain and simple.

September’s auction clearance rate pulled back a little bit to 68.7%, from 69.3% in August. Sydney dipped slightly; Brisbane edged up. Seasonality could be one of the reasons. When you look at clearance rates, just focus on Sydney, Melbourne, and Brisbane—these markets have enough volume to reflect real momentum. The auction market in the other capitals, especially Perth, is too small to be meaningful.

Rental yields didn’t move much. The national average in September was still 3.7%. Sydney was the lowest at 3.0% because prices are relatively high. Darwin remained the highest at 6.5%. Adelaide, Brisbane, and Melbourne were all around 3.6%. At today's rates and an 80% loan-to-value ratio, only Darwin can generate positive cash flow on a long-term rental for a house. But let me be clear: positive cash flow shouldn’t be the sole reason anyone buys. Capital growth, long-term stability, local demographics, economic development and economic diversity all matter a lot.

There’s one point we need to watch closely. In Adelaide, rent growth for both houses and apartments has slowed. Historically, rents often lead prices, signalling where the market is going—though there are exceptions. In September, Adelaide’s price growth didn’t speed up, and our on-the-ground team is seeing the mid- to high-end market start to soften. Whether this becomes a trend will take another one to two months of data to confirm.

The national market clearly accelerated in September—pretty much as expected after the August rate cut. But the economic prints released at the end of September changed my view. A cluster of data points lined up, suggesting the next cut may be pushed back—or even taken off the table. That casts a shadow over where Australia’s housing market goes next.

If you have any questions about property investment, please book a free 15-minute discovery call on our website. If you want a team offering one-stop service to help you build a property investment portfolio, achieve financial freedom and retire early, join our VISION Membership by booking a 30-minute obligation-free discovery session to start with. Or to keep it simple, our data-driven buyer's agency service can help. We buy and manage properties for our clients anywhere in Australia. Links to the service are in the description below.

On 1 October, the RBA chose to stand still and pause rate cuts. Why did the Bank make that call, and how might the path of cuts unfold from here? To understand that, we need to look at what the data is telling us.

Inflation Bounced Back

In August this year, headline inflation lifted—from 2.8% in July to 3.0% in August. Yet the Trimmed Mean CPI for August actually fell to 2.6%, which tells us there are plenty of highly volatile components inside the basket. For example, electricity surged 24.6% year on year for the month, and tobacco rose 12.6%. These figures landed right before the RBA’s October meeting, so holding back on a cut makes sense. Some might say, “But the Trimmed Mean went down—shouldn’t the Bank cut?” That’s not how it works. For the RBA, the quarterly inflation print carries more weight, and Q3 is due at the end of October. Seeing headline CPI turning up month-on-month, the Bank will worry about what might show up in late October—so of course it won’t move now.

Unemployment Rose

The jobless rate ticked up from 4.2% to 4.3% in August. On its own, that may not look dramatic, but it’s the third monthly rise in a row. The RBA faces a real dilemma: with unemployment rising, it would normally cut to stimulate the market, lower funding costs for businesses, and support hiring. But inflation is showing signs of lifting, which argues for pausing cuts to avoid possible uptrend. In short, whatever move the RBA chooses, it is wrong. Against a weak domestic economy, the word “stagflation” comes to my mind, growth stalls, unemployment climbs, and inflation is high. Once you slip into that state, there’s no easy way out without paying a price.

Banks' Forecasts Revised

After the RBA paused, the big four all revised their forecasts. CBA says there’s one more cut left in this cycle, in February next year. ANZ is the same. NAB says the final cut is in May next year. Westpac is the outlier: one cut in November this year, then February and May next year—three in total. Keep three things in mind with these forecasts: Banks change often; the forecasts are tweaked after data comes out, so they’re lagging indicators; and they’re frequently off the mark. NAB has been a touch more reliable—its past calls on rates and property prices have been closer to the result than the other three. So what’s the logic behind the revised forecast?

First, goods inflation has eased, but services inflation is rising—especially insurance, which just won’t come down. No surprise: competition is limited and pricing power sits with the insurers. Second, the August inflation rebound caught people off guard, so everyone’s guessing whether the all-important Q3 inflation data will be a pleasant surprise or an unpleasant one. Third, electricity is swinging wildly. With government subsidies ending, out-of-pocket bills have jumped. If subsidies don’t return, today’s high electricity prices could stick around—or rise further—shifting from “volatile” to “persistent,” and becoming a direct driver of higher inflation. Fourth, the labour market is softening a touch as unemployment edges up. Fifth, the tone at the RBA’s 1 October press conference shifted. The Governor said they’ll act cautiously and wait for more data. Markets took that to mean less future cuts. Sixth, global uncertainties like trade tensions and inflation problems in other countries.

Put all these together, the RBA paused, the big four cut back their expectations, and financial markets broadly agree: one last cut in this cycle around April next year. That said, forecasts are always subject to change. The deeper issue is Australia’s capacity to create wealth is constrained: GDP up, GDP per capita down, productivity underwhelming. An economic breakthrough isn’t easy.

To see Australia’s likely path for the economy and rates, look to the United States. The US often leads Australia by three to six months. The Fed recently cut once, and markets expect two more by year-end. What does that mean for Australia’s economy, interest rates, and house prices? To answer that, I looked back at periods when the US was cutting and Australia wasn’t—and found a pattern. If you like to dig into details, have a look at this table.

In 2001–2002 after the dot-com bust, the Fed slashed 475 basis points; the RBA cut 200, lagging well behind. Australian home prices rose about 17%. In 2008–2010 after the subprime crisis, the US went to zero and launched QE. The RBA, by contrast, raised the cash rate from 3% to 4.75%. The Aussie dollar climbed from 0.70 to 1.05 against the US dollar. Australia’s housing market rose; in 2009–2010, Sydney was up 15% and Melbourne 20%. In 2019–2020 before the pandemic shock, both the Fed and the RBA cut 75 basis points, but the US rate sat lower relative to ours. Australia’s housing market began to rebound, rising 8% that year. Overall, in most cases when the RBA lagged the Fed, Australian house prices still rose—typically in a 5%–20% range.

Historically, whenever the Fed enters a cutting cycle, the RBA follows more often than not. If there’s a global crisis—think 2001 or 2020—the RBA reacts fast, sometimes even faster than the Fed. Without a crisis, when the RBA does follow, the average delay is about six months. The underlying logic is that Australia’s economy gradually feels the transmission from the US, and then our own cutting cycle begins. Right now, the US has clearly higher unemployment and higher inflation; the one difference is their growth outpaces ours. So Australia may still follow—what we don’t know is when conditions here will deteriorate enough to force it. This Australian cutting cycle likely runs another 8–10 months, just with fewer cuts than first thought. That should still support the housing market. It’s also possible that a fresh cutting wave starts again a few months later. So what should property investors do? Which markets look better? The guidance below is general in nature and doesn’t take your personal situation into account.

If you’re an owner-occupier buying a home to live in, just buy. You’ll hold for many years. Even if today isn’t the perfect entry point, time in the market will matter more. If you insist on waiting, you’d better be confident you can pick the future low—and that the future low will actually be lower than today.

If you’re building an investment portfolio and your finances are strong, start with Brisbane, then Perth, then Sydney, then Melbourne. Putting Melbourne last isn’t because it lacks potential—it’s because the others are more likely to rise sooner. If Melbourne rises more slowly near term, it delays your refinance timeline for the next purchase, which slows your portfolio growth. Net overseas and internal migration patterns also support this view. Once you’ve covered those cities, look at the others. Keep one big principle in mind: at the same price point and within roughly the same distance, choose growth corridors over older established suburbs—the upside is bigger. And if the same budget buys either a house or an apartment, pick the house.

Watch the video version of the blog on YouTube.

15 Minutes Free Consultation (Limited-Time Free Offer)

If you have any questions about Australian real estate, we invite you to use our 15 Minutes Free Consultation service. Once you have filled in the form, a professional property investment strategist will be in touch with you. They will assess your needs and provide fundamental advice. This service is designed to help answer general property-related queries. BOOK NOW.

VISION Membership

Our Flagship Service: VISION Membership. Your One-Stop Property Investment Manager – Build a Tailored Portfolio and Achieve Financial Freedom

Whether you're an employee, a professional, a business owner or even a new migrant, everyone has a financial goal for the future. The VISION Membership is designed to solve all the pain points in your Australian property investment journey through one single, comprehensive service.

By analysing your current financial situation and long-term goals, we'll tailor a property investment plan just for you. Our team will match you with the ideal mortgage structure, tax strategies, wealth planning, and legal support, empowering you to go further, faster, and smarter on your path to financial freedom.

VISION Membership is perfect for busy individuals who want a professional team to create, expand and manage their Australian investment portfolio. If you're looking for a dedicated team, including real estate investment experts, mortgage brokers, accountants, financial planners, and property solicitors, VISION Membership is your ideal solution.

Start with an obligation-free 30-minute discovery session on Zoom. BOOK NOW.

VISION Buyer’s Agent

No time for inspections? Tired of dealing with pushy selling agents? Unsure how much to offer or feeling nervous about auctions? Worried about buying the wrong property? If any of these sound like you, AusPropertyStrategy's Australia-wide VISION Buyer's Agent Service is here to help.

We provide end-to-end support to help you build an optimised property portfolio and achieve your financial goals—whether you're investing interstate, refinancing, or planning post-settlement leasing or resale. Our services cover everything from suburb research and property selection, to price negotiation, auction bidding, and post-settlement support.

Start with an obligation-free 30-minute discovery session on Zoom. BOOK NOW.

real estate australia,real estate investing,australian property,australian housing market,australian economy,australian property investment,australian property market,buying property,australian real estate,mortgage brokers brisbane,first home buyer,Australian Real Estate,Australian Real Estate Investment,Australian Property Investment,Real Estate Investment,Property Investment,Property Investment Australia,Passive Income,Positive Cash Flow,Australia Real Estate Investing,Australian Real Estate Investors,Australian Property Investors,Vision Wealth Mentors,Vision Real Estate Investors Australia,financial freedom, freedom through property investment,real estate investors,property investment,passive income,positive cash flow,real estate course,real estate courses,real estate training,australian property market,property investment brisbane,property investment sydney,melbourne property market,investing in brisbane,investing in melbourne,how to invest in property,buying properties,start investing in property,property investment strategy,how to buy investment property,property investing tips,best suburbs to invest in sydney,locations real estate,prime location,property growth by suburb,capital growth suburbs