Inflation hits 4.3%: what a rate rise means for property
Inflation is rising, home values have fallen seven months in a row and the banks expect another rate rise on Tuesday. Here's how the pieces fit together.
The link between interest rates and the property market is front of mind this week. The Reserve Bank meets on Tuesday, and all four major banks now expect it to raise the cash rate from 4.60% to 4.85%. That would be the highest level since 2008.
Two releases in the past week explain why.
Inflation is moving the wrong way
The Australian Bureau of Statistics reported on 28 October that consumer prices rose 4.3% in the year to September, up from 4.0% a month earlier. The Reserve Bank’s preferred underlying measure, the trimmed mean, rose 1.0% over the September quarter and 3.7% over the year.
The Reserve Bank’s target is 2% to 3%. With underlying inflation still well above that, most economists see another rise as the likely response.
Home values fell for a seventh month
On 1 November, Cotality’s Home Value Index showed national dwelling values fell 1.2% in October. That’s the seventh monthly fall in a row. Values are down 3.9% over the quarter and 2.8% over the year, and sit 6.7% below their March peak. The national median dwelling value is now about $884,855.
The fall is widespread, with Brisbane and Perth now leading the decline.
How rates flow through to property
Higher rates affect the market in a few connected ways:
- Borrowing capacity shrinks. Lenders assess what a borrower can repay at a higher rate, so the amount they’ll lend falls.
- Confidence dips. Buyers who can still afford to borrow often wait to see where prices settle.
- Some owners sell, others hold. Owners under repayment pressure may need to sell, while others delay listing until conditions improve.
That combination explains much of what agents are seeing: fewer buyers at each inspection, longer campaigns and lower auction clearance rates. Our explainer on auction clearance rates covers that side.
What agents can do in a rising-rate market
- Talk to buyers about finance early. Encourage pre-approval and a conversation with a broker, so finance doesn’t fall over late in the process.
- Keep vendors informed with local evidence. National headlines are blunt. Recent nearby sales and buyer feedback are more useful.
- Stay in touch with past clients. Owners rethinking their plans often want a trusted opinion before they decide anything.
If you’re thinking about getting into real estate
Interest rates are one of the biggest forces on the property market, and on the daily work of agents. You don’t need to be an economist, but understanding how rates, inflation and confidence connect is part of giving clients good advice.
Sources: Australian Bureau of Statistics, Consumer Price Index, September 2026 (released 28 October 2026); Reserve Bank of Australia, measures of consumer price inflation; Cotality, Home Value Index, October 2026 results (released 1 November 2026).