A Welcome Pause as RBA Holds Rates

The Reserve Bank of Australia (RBA) has decided to leave the cash rate unchanged at 4.35% following its August 2026 Monetary Policy Board meeting.

The decision comes after the cash rate increased by a total of 75 basis points earlier this year. For mortgage holders, buyers and property investors, the pause provides some stability for now. However, the RBA has made it clear that further interest rate increases remain possible if inflation does not continue to move in the right direction.

Here is what the latest RBA interest rate decision means and what property owners and buyers should keep in mind.

Curious What Your Home Could Sell For?

With interest rates holding steady for another month, this is a good time to get an updated understanding of your property’s sale potential.

Buyer activity and property values can vary considerably between suburbs, so a current market update can give you a clearer picture of where your home sits in today’s market.

Why Did the RBA Leave Interest Rates on Hold?

RBA Governor Michele Bullock explained that current financial conditions are considered “somewhat restrictive”. Higher interest rates are helping to slow economic activity and reduce inflationary pressure.

However, inflation remains higher than the RBA would like.

The Australian economy is still operating above capacity, while the labour market remains relatively tight. Domestic spending and investment have also remained resilient.

The RBA expects inflation to ease through 2027 and return to around the midpoint of its 2% to 3% target range by the end of 2027.

For now, the Board has chosen to give the existing interest rate settings more time to work through the economy before making another move.

Could Interest Rates Rise Again?

Yes. The RBA has been very clear that another rate rise remains an option.

Governor Bullock confirmed that the Board discussed holding rates or increasing them at its August meeting. A rate cut was not discussed.

The RBA will continue to monitor incoming economic information before its next decision. This includes employment figures, national accounts, inflation data and information gathered through its business liaison programs.

If inflationary pressures prove stronger than expected, the Board has indicated that it is prepared to increase the cash rate again.

For borrowers, this means it may be sensible to continue allowing some room in household budgets for the possibility of higher repayments.

Inflation Remains the RBA’s Main Concern

Several factors are contributing to the RBA’s cautious position.

The ongoing conflict in the Middle East has contributed to higher and more volatile commodity prices. The RBA noted that oil and related commodity prices are higher than before the conflict.

Some Australian businesses are already passing increased costs on to customers, while others are considering doing so.

The RBA is also concerned about weak productivity growth. Continued low productivity can limit how quickly the Australian economy can grow without adding further inflationary pressure.

These factors mean the RBA wants to see more evidence that inflation is moving sustainably towards its target before changing direction.

What Is Happening With the Australian Housing Market?

The housing market was also discussed during the Governor’s media conference.

Governor Bullock acknowledged that housing market conditions have eased and that house prices have turned down after rising by around 50% since 2020.

Interest rates can influence housing prices, construction and household spending. However, the RBA stressed that housing market movements are only one part of its broader assessment of the economy.

One issue highlighted by the RBA is the relationship between falling established property prices and rising construction costs.

When construction costs increase while established property values weaken, new developments can become less financially viable. This may discourage some new housing construction in the short term.

Australia’s Housing Supply Remains an Important Factor

Despite softer housing market conditions, the RBA continues to recognise Australia’s underlying shortage of housing supply relative to demand.

Governor Bullock explained that supply and demand should ultimately influence prices and incentives to build more housing over the longer term.

This is particularly relevant when looking beyond short-term movements in property prices.

Housing markets can also vary considerably between states, cities and individual suburbs. National figures do not always reflect what is happening in a particular local market.

For property owners considering selling, understanding recent comparable sales and current buyer activity remains important when setting expectations.

What Does the RBA Decision Mean for Homeowners?

For homeowners with variable-rate mortgages, the decision to hold the cash rate at 4.35% means there is no new RBA increase flowing from the August meeting.

However, borrowers are still dealing with the impact of the rate increases already introduced this year.

The possibility of another increase also remains.

Homeowners may wish to review their current loan, repayment commitments and household budget so they understand how another potential rate change could affect them.

What Does It Mean for Property Buyers?

Interest rates continue to play an important role in borrowing capacity and affordability.

Buyers should obtain current lending advice and understand their borrowing position before making an offer. Pre-approval obtained some time ago may no longer reflect a buyer’s current capacity, particularly following this year’s rate increases.

Market conditions may also create different opportunities depending on the suburb, property type and price range.

Researching recent comparable sales can help buyers make informed decisions rather than relying solely on broader headlines about the Australian property market.

What Does It Mean for Property Sellers?

Sellers should also pay attention to how changing financial conditions affect buyer behaviour.

Higher borrowing costs can influence the amount some buyers can spend. This makes accurate pricing and a well-planned sales strategy particularly important.

The RBA’s comments also highlight why national property headlines should be viewed in context. Local supply, buyer competition and recent comparable sales can produce very different conditions from one area to another.

Understanding what buyers are doing in your immediate market provides a much clearer foundation for making property decisions.

What Happens Next?

The next RBA Monetary Policy Board meeting is scheduled for 29 September 2026.

Before then, the RBA will receive further economic data that will help determine whether inflation and economic activity are developing in line with its forecasts.

For now, the cash rate remains at 4.35%, but the RBA has kept the possibility of another increase firmly on the table.

For homeowners, investors, buyers and sellers, the coming months will be worth watching closely. Property decisions should continue to be based on individual circumstances, current financial advice and accurate information about the local property market.

At All Around Realty, we believe informed property decisions begin with honest information and a clear understanding of current market conditions. If you are considering selling and would like to understand what is happening in your local market, our team can provide an up-to-date property appraisal based on current comparable sales and buyer activity.

Get a Current Market Update

Thinking about selling, or simply curious about your home’s current value?

Call Narelle today to arrange your complimentary property market update.

Narelle Cordaro | All Around Realty
Phone: 0466 683 684

Disclaimer: This article provides general information only and should not be considered financial, lending, taxation or investment advice. Interest rates, lending policies and property market conditions can change. You should seek independent professional advice relevant to your individual circumstances before making financial or property decisions.