The Australian real estate market has been affected by higher interest rates over the past 12 months. The inflationary consequences have been widespread and Australia has been affected in similar ways to its peers, as higher prices are being factored into the economy. Overall, the Australia real estate market has entered the new economic cycle with some buffers to help manage its way through. While the Australian market remains cautious about the year ahead, here are some of the effects interest rates and inflation are having on the real estate sector.

Interest rates

The Reserve Bank of Australia (RBA) raised the official cash rate on 11 occasions between May 2022 and May 2023. Over this period, the cash rate increased by an unprecedented 375 basis points, reaching 3.85 percent in May 2023. The RBA continues to use monetary tightening policy and expects inflation to return to a targeted 2 percent to 3 percent range in a couple of years.