‘Don’t Assume’: A Reality Check for Aussie Homeowners Amid Market Shifts

With Autumn’s auction season in full swing, Australian homeowners and buyers are navigating a market in transition. While recent trends suggest that we may be past the worst of the affordability crunch, it would be a mistake to assume smooth sailing from here.

Auction Market Showing Early Strength

So far, more than 2,500 homes are going under the hammer each week across Australia, and early results are promising. National clearance rates are holding steady in the mid-65 per cent range, mirroring the levels seen in early Spring last year before the market began to cool.

However, with auction volumes set to increase in March, the market’s resilience will be tested. The first Reserve Bank of Australia (RBA) interest rate cut since November 2020 has lifted sentiment, and while this is encouraging for buyers, it does not necessarily mean affordability has dramatically improved.

Interest Rate Cuts: The Start of a Downward Trend?

The recent 0.25 per cent RBA rate cut signals what could be the beginning of a downward trend, provided inflation continues to fall. This shift in monetary policy is expected to boost confidence, giving buyers reassurance that the worst of this interest rate cycle is behind them.

📈 What to Expect Next:
🔹 A spike in buyer activity following this first cut.
🔹 A more meaningful increase in demand after three or four rate reductions.
🔹 Potential upward pressure on house prices in response to lower rates.

However, it’s crucial that buyers remain cautious and don’t assume that further cuts will come quickly. RBA Governor Michele Bullock has already warned that market expectations of three more rate cuts by mid-2026 may be too optimistic at this stage.

Buying Smart: The Importance of Budget Discipline

Given the uncertainty around future rate cuts, buyers should only commit to price levels they can comfortably manage in the long term. This Autumn may be a strategic time to buy, as some markets have experienced price weakness since November.

Between November 1 and January 31, CoreLogic data shows:
🔻 Sydney home values fell 1.4%
🔻 Melbourne dropped 2%
🔻 Hobart declined 0.8%
🔻 Canberra slipped 0.5%

Even in rising markets like Perth, Brisbane, and Adelaide, growth slowed substantially over this period, offering buyers breathing room before demand picks up again.

Why Buying Before More Rate Cuts Could Be Smart

Historically, rate cuts drive up home values, as cheaper borrowing fuels demand. CoreLogic research shows that for every 1% cut to the cash rate, property values rise by an average of 6.1%. Some suburbs see even larger gains.

📍 Suburb Price Growth After a 1% Rate Cut:
🏡 Sydney: +19% in Leichhardt & Sutherland-Menai-Heathcote, +18% in Warringah, +17% in Parramatta.
🏡 Melbourne: +18% in Whitehorse-West & Essendon, +17% in Manningham-West & Boroondara.
🏡 Brisbane: +5% in Sunnybank, Nathan & Brisbane Inner-North.
🏡 Hobart: +6.5% in the inner city, +5% in the city’s North-East.
🏡 Regional Australia: +12% in Wollongong, +10% in Kempsey-Nambucca, +6.5% in the Gold Coast hinterland & Newcastle, +6% in Tasmania’s South East Coast.

With median values in many of these suburbs still below their peaks, this Autumn may be an opportune time for families seeking forever homes to buy before prices start rising again.