Key takeaways
Contrary to most forecasts, the Reserve Bank left the cash rate unchanged at 3.85% in July.
Dr. Andrew Wilson correctly predicted the pause, arguing the RBA had already tightened enough and inflation was moderating.
May building approvals up 3.2% (after April’s 4.1% decline), with unit & townhouse approvals up 11.3%, while detached homes barely moved.
Apartment approvals are nearly 50% down from the 2016 peak.
National auction clearance rate: 67.9%, slightly lower than the week before but well above last year’s 61.8%.
The Reserve Bank surprised many this month by leaving interest rates on hold at 3.85%—a decision that caught most commentators off guard.
But not everyone was surprised. Dr. Andrew Wilson, Chief Economist at My Housing Market, was one of the few voices predicting the RBA would sit tight. And as we’ve seen, he was right.
So what’s really going on? Why did the RBA pause when inflation and cost-of-living pressures remain front of mind for many Australians? And what does this mean for property investors, homebuyers, and the broader economy?
That’s what we discuss in this week’s Property Insider video, plus we look at the latest home building trends, auction clearance rates and what’s really happening with property around the country.
RBA decision: rates hold steady
It’s now old news that the RBA kept the cash rate at 3.85% in July, after rate cuts in February and May this year.
Watch this week’s Property Insider video as Dr Andrew Wilson explains why he believes the current settings are achieving a balance of keeping inflation in check while supporting a strong labour market.
Dr. Wilson saw the “pause” coming because:
- The RBA had already done much of the heavy lifting.
- Inflation pressures are easing without the need for further interest rate cuts at present.
- The labour market remains strong, and there is no need to boost the economy too aggressively.
- Global uncertainties (China’s slowdown, geopolitical tensions) mean the RBA doesn’t want to overcorrect.
This contrarian (but accurate) call underscores the importance of considering the broader economic context, not just headline inflation.
Clearly, the RBA Board is being cautious, wanting more data to confirm inflation is tracking sustainably towards the 2.5% target.
Importantly, they feel well positioned to act if global developments impact Australia.
Recent rate cuts have acted as a clear stimulus to housing markets, with home prices accelerating as a result of February and May rate reductions and they don’t want to fuel the housing markets further.
Most analysts still expect two more rate cuts in 2025, but if the economy slows more rapidly, we could see additional cuts.
For property investors, this creates a unique opportunity: a stabilising interest rate environment, resilient buyer activity, and long-term housing shortages are all aligning to keep pushing property values even higher.
- Also read:This week’s Australian Property Market Update – Latest Data, State by State July 15th 2025
- Also read:Perth housing market update | July 2025
- Also read:Latest property price forecasts for 2026 revealed. What’s ahead in our housing markets in the next year or two?
- Also read:Australian housing market update | July 2025
- Also read:Everything you need to know about the state of Australia’s property markets in 20 charts – July 2025
Now is the time to plan strategically, act countercyclically, and position yourself for the next phase of the property cycle.
Home building approvals rise
Watch this week’s Property Insider video as Dr. Andrew Wilson discusses how residential building approvals for May rose 3.2%, rebounding after April’s fall of -4.1%.
The rebound in the month was driven by apartments and townhouses, which increased by 11.3% month-over-month, whereas detached houses remained broadly flat at 0.5%.
In annual terms, dwelling approvals are running at 183,000, up from the 165,000 seen in May 2024, a year ago.
Nevertheless, given our still strong population growth (the 15 years plus population increased by 444,000 over the past year), the level of dwelling approvals remains low and still well below the 240,000 that is consistent with the government’s housing target.
In this context, vacancy rates have continued to decline, with the nationwide residential vacancy rate now at 1.6%.
As you can see from the following chart building approval for apartments down almost 50% from the 2016 peak.
And we know that just because apartment development are approved, it doesn’t mean they come out of the ground straight away and even if they do there’s a two or three at timeframe for the development to be completed.
More strong auction results despite Holiday Break
Most capital city home auction markets have continued to report strong auction results over the past week despite the distractions of school holidays.
The national weekend auction market reported an average clearance rate of 67.9% over the past week, which was lower than the 71.0% reported over the previous week but higher than the 61.8% reported over the same week last year.
Although listings numbers continue to fall into July, buyer activity remains robust in most capitals, with Sydney a standout auction performer over the past week.
