Rate hold stalls momentum but August cut set to reignite market

Australia’s housing market slowed sharply in July after the Reserve Bank’s surprise rate hold, with national house price growth remaining flat – a steep drop from June’s 1% pace. 

“Once the expected rate cuts commence in August, housing markets should return to the acceleration trajectory witnessed earlier in 2025,” said Nerida Conisbee (pictured), chief economist at Ray White. 

Expectations for an August cut have surged after annual inflation dropped to 2.1% in the June quarter – the lowest since 2021 – with trimmed mean inflation easing to 2.7% and unemployment ticking up to 4.3%. Financial markets and major banks now widely expect the RBA to deliver a 0.25% rate cut in August, with a follow-up cut likely by November. 

National and city-level market performance 

National house prices reached $950,000 in July, while unit prices climbed to $700,000, equating to annual growth rates of 6.4% for houses and 5.2% for units. 

Major cities showed mixed results: 

• Sydney houses slowed from 0.5% to 0.2% monthly growth 
• Melbourne houses dipped into negative territory at -0.1% 
• Brisbane houses cooled from 1.1% to 0.2% 
• Perth houses, the nation’s leader, eased from 1.3% to 0.6% but kept its top position 

“The standout story was the remarkable resilience of unit markets, which maintained solid 0.3% monthly growth,” Conisbee said. “Sydney units defied all trends by accelerating from 0.2% to 0.4% monthly growth – the only market segment nationally to improve during the rate hold period.” 

Units outperform houses amid supply crunch 

This unit resilience reflects persistent undersupply in the apartment sector and affordability pressures steering buyers toward smaller dwellings. 

• Perth units led the nation with 1% monthly growth 
• Brisbane units rose 0.6%, well above Brisbane’s house growth of 0.2% 

“Unit markets, having demonstrated resilience during the hold period, appear particularly well-positioned to benefit from renewed easing,” Conisbee said. “The structural tailwinds of supply constraints and affordability-driven demand should amplify the impact of lower rates, potentially pushing annual unit growth well above the current 5.2% national rate.” 

Potential for double-digit growth ahead 

Conisbee said the combination of lower borrowing costs and pent-up demand from July’s pause could deliver a strong rebound. 

“If the anticipated cutting cycle delivers three reductions by year’s end, national house price growth could accelerate beyond the current 6.4% annual rate, potentially reaching double-digit territory as witnessed in Perth’s 11.3% annual performance,” she said. 

Read the Ray White analysis in full here. 

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