Australia’s inflation remains steady, with annual growth at 2.4% in April. Underlying inflation, which is the Reserve Bank’s key indicator also sits comfortably within the 2–3% target range, coming in at 2.8%. In response, the RBA reduced the cash rate by 0.25% in May, bringing it down to 3.85%. This marks the second cut this year, providing relief to mortgage holders and boosting buyer confidence.
REA Group senior economist Eleanor Creagh notes that while sentiment is improving, affordability challenges persist. She emphasises that sustained improvements will depend on further rate reductions over time. Housing inflation edged up to 2.2% in April, driven by population growth and limited housing supply. However, this remains the lowest annual increase since April 2021, indicating a stabilising market. The rental market is also showing signs of relief.
Rents rose 5% over the year to April, the lowest annual growth since early 2023, as vacancy rates improve across most capital cities. CoreLogic analysts suggest that while the rate cuts support the housing market, significant price growth is unlikely until borrowing capacities improve. Overall, the outlook is cautiously optimistic: easing financial pressures, improving market confidence, and early signs of balance returning to both buying and renting sectors.
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