Stalled buyer activity highlights urgent need for relief, says industry body
The Real Estate Institute of Australia (REIA) has called on the Reserve Bank (RBA) to consider a rate cut at its next meeting, warning that first-home buyer activity is falling and affordability pressures remain high.
REIA president Leanne Pilkington (pictured) said a modest reduction in the cash rate could provide relief to borrowers without derailing the central bank’s inflation goals.
“If first-home buyer activity continues to weaken, a rate cut at the RBA’s next meeting would provide much-needed relief for households and help restore confidence in the housing market,” Pilkington said.
The RBA left the cash rate unchanged at 3.85% in its latest decision, defying some expectations of a shift. While the move provides short-term stability, Pilkington said it does not address the deeper affordability challenges that continue to shut out many new buyers.
“Keeping rates steady offers some stability, but it doesn’t yet ease the financial strain facing many Australians,” she said. “We’re seeing reduced activity among first-home buyers, which signals broader affordability issues that remain unresolved.”
Australian Bureau of Statistics figures show new loan commitments to first-home buyers dropped 4.2% in the March 2025 quarter, with the value of those loans falling 3.2%. Pilkington said the data highlights how high borrowing costs, combined with cost-of-living pressures and stagnant wages, are discouraging new market entrants.
“Even with the RBA holding steady, borrowing costs are still historically high for many new entrants to the market,” she said.
Pilkington acknowledged the central bank’s focus on inflation but argued that monetary policy needs to be better balanced against the risk of suppressing demand and worsening affordability.
“We understand the RBA’s priority is returning inflation to its target band, but this needs to be balanced against the risk of further dampening housing demand and locking first-home buyers out of the market,” she said. “A modest rate cut could help ease mortgage stress without undermining the broader inflation goals.”
She added that although rental market pressures are starting to ease, meaningful relief will only come once borrowing costs begin to fall.
Beyond interest rates, Pilkington pointed to broader structural issues such as housing supply constraints, delays in planning systems, and insufficient buyer incentives as ongoing barriers to ownership.
“Supply constraints, slow planning systems, and inadequate incentives continue to lock buyers out,” she said. “We urge all levels of government to push forward with reform that increases housing availability and supports affordability, particularly for younger Australians and renters.”
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