This week’s inflation data has confirmed what many in the market had been anticipating: price pressures are still running hotter than the Reserve Bank of Australia would like. The latest figures showed a stronger than expected rise in underlying inflation, with trimmed mean inflation lifting by 0.9% in the December quarter and 3.4% over the last year, well above the RBA target of 2-3%.
In response, the RBA has now lifted the cash rate from 3.60% to 3.85%, marking it’s latest move to curb inflation and stabilise the economy and the first time the cash rate has increased since November 2023.
How This Impacts the Property Market
A higher cash rate flows quickly through to the banks and inevitably, to borrowers. This shift is likely to influence the property market in several key ways:
- Reduced buyer demand: Higher mortgage repayments can sideline some would-be buyers, particularly in already stretched markets.
- Lower borrowing capacity: Servicing calculators tighten almost immediately after rate hikes, reducing how much buyers can borrow and therefore spend.
- Increased uncertainty: Sellers and buyers may pause or delay decisions as they reassess affordability and market direction.
Industry analysts and data providers have consistently shown that sentiment tends to soften when borrowing costs rise. The current environment is no exception.
Navigating With Confidence: Why Updated Valuations Matter
In times of economic movement, clarity is everything. Whether you’re considering selling, refinancing, purchasing, or managing a portfolio, an up-to-date, independent valuation provides a reliable foundation for your next move.
