How lower interest rates are influencing property prices
The Reserve Bank of Australia’s (RBA) May rate cut is already flowing through the property market. It was the second cut this year, with the cash rate lowered by 25 basis points to 3.85% amid soft GDP growth and with core inflation returning to the 2–3% range for the first time since late 2021. While a larger 50 basis point cut was considered, the board opted for a more measured move – but further cuts remain on the cards, and markets are taking notice.
According to Cotality’s Monthly Housing Chart Pack – June 2025, there’s now an 89% chance of another cut in July, and the big four banks forecast the cash rate will fall to between 3.1% and 3.35% by year-end. With borrowing costs trending lower, demand is rebounding.
Buyers are back – but supply’s still playing catch-up
According to Cotality’s May Home Value Index, national home values rose by 0.5% in May – up from 0.3% in April – with every capital city recording month-on-month gains of at least 0.4%. This momentum reflects a rebound in buyer confidence following the May rate cut – but there’s more demand than the market can comfortably absorb.
New listings are rising, but not fast enough to meet that demand. SQM Research reported a 5.9% monthly increase in total property listings in May, with a 4.2% rise in new listings and an 8.8% increase in older stock (properties on the market for 180+ days).
Meanwhile, fresh housing supply remains constrained. The Australian Bureau of Statistics reports a 19% fall in multi-unit approvals in April, and only a marginal lift in detached home approvals.
What this means for investors
With demand outpacing supply, property prices are on the rise – creating opportunities for investors ready to act. If your circumstances allow, this could be a good time to enter the market or expand your portfolio. But rising prices can also lead to rushed decisions, which is why it’s so important to stay grounded in the fundamentals.
At Investors Dream, we believe successful property investment always relies on three things: solid research, clear goals and a long-term view – regardless of market conditions. Whether you’re just starting out or building on an established portfolio, we help you identify high-quality residential and commercial properties with strong capital growth potential and reliable rental returns.
Our service is tailored to your goals and lifestyle – designed to make your investment journey focused, informed and achievable.