The Reserve Bank of Australia is expected to deliver a fourth interest‑rate increase despite a sharp downturn in the property market, economists said. Inflation control remains the central concern for the central bank, and the housing market is not being treated as a primary factor in rate‑setting decisions.
Data from Cotality show house prices are now falling in more than 90% of Australian suburbs, driven by higher borrowing costs, a weak economy and recent tax changes affecting investors. AMP chief economist Shane Oliver projected that average home values could be about 10% below their recent peak within the next six to nine months, describing it as the worst post‑war correction. Commonwealth Bank analysts forecast a 12‑13% decline in Sydney and Melbourne, with 8% drops in Brisbane, Perth and Adelaide, noting that even such losses would not substantially ease chronic affordability issues.
Reserve Bank Governor Michele Bullock told reporters after the August 11 meeting that the housing market downturn is “not the main game” for rate decisions, adding that prices remain roughly 50% higher than in 2020. Oliver said the issue will feature in upcoming RBA board meetings at the end of the month and in November, and both he and Challenger chief economist Jonathan Kearns expect another hike at the early‑November meeting. Kearns, a former senior RBA official, said the correction is more rapid than anticipated but not large enough to halt further tightening.
Meanwhile, Commonwealth Bank head of Australian economics Belinda Allen anticipates that national accounts will show GDP growth of just 0.1% in the June quarter, the weakest expansion in two‑and‑a‑half years. She warned that persistent inflation is being driven by rolling supply shocks, higher domestic spending relative to offshore, and weaker productivity growth, leaving the RBA with considerable work ahead.
