The Reserve Bank lifted the cash rate to 4.60% on 29 September 2026, its fourth increase this year. It then lifted the rate again, to 4.85% on 4 November 2026. The property market is splitting sharply by state. Here’s what the numbers say about the rest of 2026 and into 2027.
Where Interest Rates Sit Now
The cash rate is now 4.85%, reached through five 0.25 percentage point increases in February, March, May, September and November 2026, more than undoing the relief borrowers had from the 2025 cutting cycle. After holding through June, July and August, the Reserve Bank moved again on 29 September, saying inflation remains elevated and that “some of the upside risks flagged in August are materialising”, including higher fuel prices flowing through to other goods and services.
The decision was unanimous, and the Board said it is prepared to raise rates further if that is what it takes to bring inflation back to target. On the Reserve Bank’s own official statement, this is a bank still worried about upside inflation risk, not one preparing to ease.
What Happened on 29 September, and What Comes Next
Going into the meeting, the major banks were split. NAB had called a 25 basis point hike in September, CBA and ANZ expected the same rise in November, and Westpac expected no further move this year. NAB’s call proved right. Some economists, including Betashares, then tipped another increase, and the RBA delivered it at its November meeting, lifting the cash rate to 4.85% on 4 November.
The split came down to how each bank read July’s inflation data. Headline annual inflation eased to 3.5%, but the trimmed mean, the Reserve Bank’s preferred measure of underlying inflation, stayed at 3.6%, above the target band. The Board’s statement suggests it gave more weight to the underlying measure and to fresh price pressure from fuel.
| Date | Cash rate | Move |
|---|---|---|
| February 2026 | 3.85% | +0.25 |
| March 2026 | 4.10% | +0.25 |
| May 2026 | 4.35% | +0.25 |
| June–August 2026 | 4.35% | Held |
| 29 September 2026 | 4.60% | +0.25 |
| 4 November 2026 | 4.85% | +0.25 |
What Each Rate Move Costs a Borrower
Each 0.25 percentage point move works out to roughly $75 to $80 a month in extra repayments on a $500,000 loan over 30 years, and closer to $115 to $120 a month on a $750,000 loan. That’s the same maths that made the 2024-25 rate cuts worth about $100 to $130 a month on a typical loan — run in reverse. On the average $731,000 mortgage, the September rise alone adds about $110 a month, and the four 2026 increases together add roughly $460 a month.
The Property Market Has Broadened Its Slowdown
The national Home Value Index fell 0.7% in July 2026, the largest single-month drop since December 2022, and for the first time this cycle the weakness has spread almost everywhere. More than three-quarters of capital city suburbs recorded value declines over the three months to July, according to the latest market update. Sydney (-1.4% in July, -5.3% since January) and Melbourne (-1.2%, an eighth straight monthly fall) are leading the retreat, and even Brisbane and Adelaide are now recording back-to-back monthly declines. Perth is barely positive at +0.1%, with listings up 28% year-on-year easing what had been the tightest market in the country. Only Darwin and Hobart are still holding firm.
None of this points to a crash. Low unemployment, ongoing population growth and a genuine shortage of new construction are all working against a sharp correction, and much of the current softness looks like sellers withdrawing rather than accepting discounts. But it does mean the growth-corridor markets that outperformed through 2024 and 2025, Perth and Adelaide especially, are no longer immune to what higher rates are doing to borrowing capacity.
Why the FY27 Forecasts Split So Sharply by State
Look past the current softness and the forecasts for the year to June 2027 diverge hard by state. Domain’s FY27 outlook has Sydney falling 3% to 7% and Melbourne falling 4% to 8%, while Brisbane (+3% to +7%), Adelaide (+4% to +8%) and Perth (+5% to +9%) are tipped to reach record highs. ANZ Research takes the opposite view, forecasting capital city declines across the board of 4.3% in 2026 and 3.4% in 2027, a peak-to-trough fall of roughly 10.6% nationally. When two credible forecasters land on opposite conclusions from the same data, the honest answer is that nobody knows yet.
The case for the outperforming states rests on supply and affordability, not sentiment. Growth corridors like Alkimos in WA and Angle Vale in SA are selling new-build stock at price points Sydney and Melbourne buyers left behind years ago, which a rate hike bites into less. Queensland corridors such as Yarrabilba carry the same logic. Victoria is the exception worth flagging: Melbourne’s established market sits in Domain’s weakest bracket, but outer growth areas like Wyndham Vale run more on new-housing supply and population growth than the established-home price cycle, so one citywide forecast doesn’t necessarily apply to every suburb in it.
What This Means If You’re Buying or Holding Now
If you’re weighing up a purchase in the next few months, the realistic near-term picture is more interest rate uncertainty, not less. That argues for less urgency in Sydney and Melbourne, where prices are still falling and a rushed purchase risks buying before the bottom. In the growth corridors tipped to outperform, the calculus is different: new-build stock at accessible price points tends to hold up better through a rate-driven slowdown, though July’s numbers are a reminder that even Perth and Adelaide aren’t immune to a genuinely tighter borrowing environment.
The takeaway: September showed that when the data sits close to the line, a single inflation release can swing the outcome. A buying decision that only works if rates fall in 2027 is risky, and budgeting on the assumption that the current 4.85% is the peak is risky.
For anyone already holding a variable-rate mortgage, the practical move is to stress-test the budget against at least one more 0.25 percentage point rise. The Reserve Bank has said plainly that it will move again if inflation requires it.
Forecasts only tell half the story. If you’re deciding whether to act on them, the NSW property market: buy now or wait analysis weighs up timing for NSW buyers specifically.
This article summarises publicly available forecasts from the Reserve Bank of Australia, the major banks and property data providers as at early October 2026. Interest rate and property price forecasts are inherently uncertain and can change quickly as new data arrives. This is general information, not personal financial or investment advice — speak to a licensed mortgage broker or financial adviser before making a decision.
Update, 13 November 2026: Rate figures in this article were updated for the RBA increase to 4.85% on 4 November 2026, its fifth this year (RBA media release 2026-30).
