House price growth tipped to cool amid interest rate uncertainty

Concerns that interest rates will remain higher for longer, and potentially even rise from here, may lead to slower property price growth over the winter months, experts say.

However, a fear-of-missing-out will likely spur on buyers currently waiting on the sidelines for the first signs of a rate cut.

The Reserve Bank on Tuesday held the cash rate target steady at 4.35% and left open the possibility of a further rate hike should inflation remain high.

"We don't think we necessarily have to tighten again, but we can't rule it out. If we have to, we will," RBA governor Michele Bullock said in a post-meeting press conference.

Hopes for an early interest rate cut have faded following stronger-than-expected inflation data in the March quarter, with financial markets no longer pricing in the first move before mid 2025.

Property price growth expected to slow

With interest rates remaining on hold since November, PropTrack senior economist Eleanor Creagh said the extended pause has bolstered confidence among both buyers and sellers, which led to swift price increases over the summer selling season.

But heading into winter, she expects this may change.

"While growth in most markets across the country remains pretty robust, we're now entering that seasonally quieter period," Ms Creagh said.

"Given the timing of rate cut expectations have been pushed back to what looks like early 2025 at the earliest, we'll probably see growth slowing a little bit through the winter months," she added.

Property prices reached a new record high in April, but interest rate uncertainty could see the pace of growth cool in the months ahead. Picture: Getty

Following Tuesday's RBA decision, Knight Frank chief economist Ben Burston said the RBA’s announcement significantly diminishes the likelihood of a rate cut this year.

"It still could happen, but it's much less likely now. They're not ruling anything out," he said.

Mr Burston said while buyer caution around interest rates has persisted, the prevailing fear of missing out has overshadowed these concerns.

"Factors such as rental price growth, lack of housing supply, rising property prices and population growth have been quite forceful.

The RBA held interest rates steady in May but hasn't ruled out a future hike if inflation remains stubbornly high. Picture: Getty

"I don't think the market has been hugely dependent on the prospect of interest rate cuts, so I don't think any delayed rate cuts will critically impact the overall sentiment," he said.

"In terms of activity, I think it'll continue to be pretty solid. But the change of tone on inflation and interest rates is likely to pair back growth rates a bit."

Active sellers, eager buyers

With disruptions during April around school holidays and the Easter and ANZAC Day long weekends now out of the way, buyer and seller activity is set to be tested under more 'normal' market conditions.

This week, 2,548 homes are scheduled for auction across Australia, a 43% rise from the same week last year. Victoria will see the most homes auctioned, at 1,158 (up 55%), followed by New South Wales, at 906 (up 38%).

Next week will be even busier, with 2,765 auctions currently scheduled, up 28% year-on-year.



PropTrack economist Anne Flaherty said the current market has defied post-Easter trends.

"We normally see the total number of homes heading to auction and going up for sale dip pretty significantly post Easter. But this year's been different; we've seen really strong numbers of homes being auctioned compared to the same time last year," she said.

Despite the high number of auctions, clearance rates are holding up well, averaging around 60% in recent weeks.

Source: PropTrack

Bianca Denham from Ray White said the market remains incredibly buoyant.

"We're not seeing buyers slow down. Our inspection numbers year on year are up 24.5%," Ms Denham said. "Keeping the cash rate on hold will just give more confidence to both buyers and sellers."

Two-speed market

But Melbourne-based buyers' advocate Cate Bakos said when it comes to buyer appetite, she's seeing a 'two-speed market'.

"Everything that's renovated and really nicely presented is flying with competition, and everything that isn't is languishing," she told

"Everyone knows that building materials and labour remains difficult, though there are signs that this is improving," she said.

Despite higher numbers of listings in Victoria and New South Wales compared to 12 months ago, the property markets in South Australian and Western Australia have not seen the same volumes, which has kept prices high.

Home prices in Perth and Adelaide hit new peaks in April, driven by relative affordability and low stock levels. The two capital cities have seen extraordinary growth over the past 12 months, up 20% and 14% respectively, with the outperformance expected to continue.

Despite this, buyer's agent Rich Harvey has observed hesitancy among buyers due to current interest rates as they hold out for potential rate reductions.

"Once rate cuts become likely, we anticipate a resurgence in market demand. Many are waiting for this signal before making a move," he said.

Ms Bakos expects buyers will take solace from the RBA's decision to keep the cash rate on hold, noting many buyers are poised to jump before any rate cuts occur.

"Everyone remembers the pain of 2021 when prices were flying," she said.

"As soon as there's talk of a rate drop or an actual rate drop, we're anticipating that buyers will flood in – and they don't want to get swept up in that.

"For now, a lot of people are trying really hard to time the market."

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