RATE RISE DEEPENS HOUSING PRESSURES
The Real Estate Institute of Australia (REIA) says today’s decision by the Reserve Bank of Australia to increase the official cash rate by 25 basis points to 4.60% will place further pressure on homeowners, buyers, renters, and housing supply.
REIA President Jacob Caine said the fourth cash rate increase of 2026 would compound the financial strain already being felt across Australia’s housing market.
“Today’s increase is another difficult blow for households already dealing with higher mortgage repayments and sustained cost-of-living pressures,” Mr Caine said.
“REIA’s Housing Affordability Report for the June quarter 2026 showed that home loan repayments already required 50.9% of median family income.
“Average monthly repayments reached $6,018, an increase of 12.4% over the year, while median rent required 23.9% of median family income.
“These figures show that households have very little room to absorb another rate rise.”
Mr Caine said the rate rise would also reduce borrowing capacity for prospective buyers.
“This will make the path to home ownership harder, particularly for first home buyers trying to save a deposit while paying high rents,” Mr Caine said.
“The impact will extend beyond mortgage holders, as higher financing costs affect housing construction and private rental investment.
“Higher interest rates increase the cost of financing new projects, reduce development feasibility, and make it more expensive for investors to provide rental housing.
“At a time when Australia urgently needs more homes, policy settings must avoid further discouraging the investment required to expand supply.
“Renters are also exposed. When borrowing costs rise and the supply of rental properties remains constrained, pressure builds on rents and household budgets.”
Mr Caine said monetary policy could address demand across the economy, but it could not resolve Australia’s structural shortage of housing.
“Australia cannot interest-rate its way out of a housing supply crisis. Governments must address the taxes, planning delays, infrastructure constraints, and regulatory costs that prevent homes from being delivered quickly and affordably.
“Homeowners and renters should not be expected to carry the full burden of bringing inflation under control while structural barriers continue to increase the cost of housing.”
REIA is calling on federal, state, and territory governments to accelerate planning approvals, support private investment in new rental supply, and avoid property tax changes that further undermine housing delivery.
“The sustainable answer to housing affordability is a significant and lasting increase in supply,” Mr Caine said.
“Every level of government must ensure its housing, tax, and regulatory policies are working together to deliver more homes, rather than adding to the pressures facing Australian households.”
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Media contact:
Cody Vella, REIA Media and Communications Manager
0447 611 102 | cody.vella@reia.com.au
