Further house price growth if rate cut occurs, expert

Canberra Times

19-05-2025

What are you predicting for May's rate decision by the RBA?
I expect the RBA to cut interest rates in May, likely by 0.25per cent.
"I expect the RBA to cut interest rates in May, likely by 0.25 per cent," says Ray White Group's chief economist Nerida Conisbee. Pic: Supplied
This would be a significant move that reflects the changing economic landscape and the need to address mounting global pressures on our economy. While it is possible we will see a 0.5per cent cut, the Board has been very careful this cycle and I think that that they will be hesitant to cut too hard
What are the key conditions that will bring this decision?
The key conditions driving this rate cut include persistent global economic uncertainty, growing concerns about Australia's economic growth trajectory, and signs that inflation pressures are finally easing.
The RBA will be particularly focused on potential employment impacts from a global slowdown, as well as the potential for tariffs to impact inflation
Is the Trump factor a consideration?
The Trump administration's economic policies are absolutely a consideration for the RBA. The introduction of high tariffs has created significant market volatility and disrupted global trade flows.
The Trump administration's economic policies are absolutely a consideration for the RBA, according to Ms Conisbee. Pic: Shutterstock
While Australia isn't a major direct trading partner with the US, the secondary effects through our relationship with China and global supply chains have created a new layer of uncertainty that the RBA must factor into its decision-making process.
If interest rates go down, what is the expected impact on house prices in Australia generally?
A reduction in interest rates will almost certainly stimulate further house price growth across Australia. Lower borrowing costs increase buyer capacity and confidence, typically leading to more competition for available properties.
We're already seeing strong momentum in markets like Perth, Adelaide and Brisbane, but even the currently slower Sydney and Melbourne markets would likely respond positively to rate cuts, as they've historically been quite sensitive to interest rate movements.
Would a cut in interest rates also affect listing numbers?
It is likely that a cut will encourage more people to sell.
It is difficult to forecast listing volumes as they tend to increase either because people are stressed and needing to sell, or alternatively more positive and deciding to upgrade or take advantage of buoyant conditions. A rate cut will lead to greater positivity and this will mean more listings.
How many cuts do you expect to see this year?
I expect we'll see multiple rate cuts throughout 2025, likely 4 in total, including the one tomorrow. We have however seen rapidly changing economic conditions this year and a lot will depend on how global economic conditions evolve.
That said, we shouldn't expect rates to approach the extreme lows we saw during the COVID period. The RBA will maintain a measured approach, balancing the need to support economic growth against the risk of reigniting inflation.