A continued rate hold ‘risks pushing more buyers to the sidelines'
An industry body has called on the Reserve Bank of Australia (RBA) to consider an early reduction in the official cash rate next year, warning that ongoing rate holds may further dampen activity in the housing market.
The RBA kept the cash rate unchanged at 3.6% on Tuesday, as annual inflation remained at the upper end of its target range.
Leanne Pilkington (pictured top), president of the Real Estate Institute of Australia (REIA), stated that while the decision to pause was expected, it did little to ease the pressure on mortgage holders and those seeking to enter the property market. She said many in the sector now argue that a rate cut is needed sooner rather than later to restore confidence and encourage participation.
“While a pause is technically better than a rise, for hundreds of thousands of Australian families, it is necessary now to be cautious as the RBA may hold rates for longer than expected into the following year,” Pilkington added.
She emphasised the importance of the December quarter inflation data, due at the end of January, in influencing the RBA’s decisions in 2026. “While some major banks have factored in a rate cut by February or March next year, most forecasts now point to cuts being delayed until well into 2026,” she said.
“With spring usually being a strong sales period, a continued rate hold risks pushing more buyers to the sidelines as future conditions remain uncertain.”
With the national unemployment rate rising to 4.5% in September, above the RBA’s forecast of 4.3%, Pilkington has urged the central bank to balance inflation and employment considerations, with attention to the broader impact on housing. The upcoming labour force and inflation data will be key ahead of the RBA’s next meeting on 9 December.
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
