The Reserve Bank of Australia’s (RBA) decision to hold the official cash rate at 4.35% in its August meeting signals a cautious approach as it monitors the economic landscape. This aligns with our expectations that the RBA would prefer to wait and observe before making further changes.

The announcement follows the latest Consumer Price Index (CPI) figures, which showed a slight increase in annual trimmed mean inflation to 3.9% only slightly higher than the RBA forecast of 3.8%. 

For the real estate market, the sixth consecutive rate hold since November 2023 provides a moment of stability amidst fluctuating economic conditions.

Market movements occur so rapidly these days that a single rate increase or decrease only impacts the market briefly; significant changes are usually seen with consecutive movements.

Currently, we are not in a phase of rapid consecutive rate changes, allowing the market to operate and adjust more naturally.

Spring arrived early for the Sydney property market in 2024, with healthy listing numbers bringing forward activity in July, a traditionally quieter period.

This earlier than anticipated start to the industry’s peak selling period has set the stage for strong opportunities for both buyers and sellers in the months ahead as values across Sydney remain relatively stable.

Both buyers and sellers stand to benefit from the rate hold. Buyers can proceed with more confidence, and sellers will find reassurance in the market’s stability, resulting in a balanced marketplace where price negotiations can happen with greater certainty. 

Interestingly, the interest rate rises to date do not appear to have significantly affected people’s ability to buy property in Sydney. Many potential buyers still have substantial savings, and those who own property in Sydney often possess significant equity.

This financial buffer means that the impact of rate changes is less pronounced for these buyers, who continue to have considerable buying power.

First home buyers (FHB) and those trying to re-enter the market may face more challenges, but those who have been in the market for some time, even just five years, have likely built up substantial equity. This equity provides a cushion, allowing them to weather economic shifts more comfortably.

Overall, the RBA’s decision to hold rates steady creates confidence among buyers and sellers, encouraging them to make decisions with greater assurance. As the market adjusts to this period of stability, we expect more measured and strategic decisions among buyers and sellers for the second half of 2024.

Related reading

Rates and consumer confidence underpins Sydney’s resilient market - BresicWhitney

John McGrath –With falling rates overseas, when will the RBA cut rates here?

Resilience underpins Sydney property as end of financial year approaches - BresicWhitney