Australia Raises Its Cash Rate to 4.60% as House Prices Fall in Most Capital Cities

The Reserve Bank of Australia lifted its cash rate target by 25 basis points to 4.60% on 29 September 2026, tightening into a housing market it calls a downturn.

The Reserve Bank of Australia raised its cash rate target by 25 basis points to 4.60% at its meeting on 29 September 2026, and the bank's own rate page shows the new level taking effect on 30 September. The decision, issued as media release number 2026-27 by the Communications Department in Sydney, arrived with an unusually blunt line about property: housing prices, the Board wrote, "have fallen in most capital cities and new housing loans have declined noticeably".

Why the Board moved again

The reasoning is about prices, not property. Recent inflation outcomes in Australia, the Board said, were stronger than expected. Growth in output has slowed but, in its words, "at the margin, was stronger than expected in the June quarter". Labour market conditions have eased broadly as expected in recent months, and the Board noted signs that growth in consumer spending is easing gradually.

The statement also looks back at the tightening already delivered. "The three increases in the cash rate target since the beginning of the year have tightened financial conditions," it says. The minutes of this meeting are due on 13 October 2026, and the next decision is scheduled for 2.30 pm on 3 November 2026.

Tightening into a falling market

This is the part worth pausing on. A central bank raising rates while house prices slide is an uncomfortable combination, and the Board says so plainly, listing "uncertainties about the economic effects of the downturn in the housing market" among the things it is weighing. Australian mortgages are overwhelmingly variable rate, so a change in the cash rate reaches household budgets within weeks rather than years. That is why the same sentence can report both falling prices and a noticeable decline in new housing loans: borrowing capacity shrinks as the rate rises, and fewer buyers qualify.

What our own data shows, and where it differs

The Glopra row for Australia was refreshed on 28 September 2026 and is built from a single provider's national apartment series. The national average asking price is 471,613 US dollars per unit in the week to 8 September 2026, and the national average weekly asking rent converts to 1,920.82 US dollars a month on 12 September. From that pair we calculate a gross rental yield of 4.89 percent. Our stored annual price change for Australia is 10.8 percent, and our bubble risk score is 61, in the elevated band.

That 10.8 percent does not contradict the Board, because it answers a different question. Ours is an annual change in advertised asking prices across the whole country, regional markets included. The Board is describing a recent fall concentrated in the capital cities, measured on completed sales. Asking prices are set by sellers and move late; capital city sale prices turn first. Neither figure converts into the other, and reading them side by side is the point.

What a foreign buyer faces

For an overseas investor, two numbers outrank the cash rate. Rental income earned by a foreign resident is taxed from the first dollar at a flat rate with no tax-free threshold, which in our standardised non-resident case works out at 30 percent of gross rent. Round-trip transaction costs come to about 7.3 percent. Above both sits an ownership rule: Australia currently bars foreign buyers from established homes under a ban running from 2025 to 2027, so new-build stock is the only way in.

Sources: Reserve Bank of Australia, Monetary Policy Decision, media release number 2026-27, 29 September 2026 https://www.rba.gov.au/media-releases/2026/mr-26-27.html; Reserve Bank of Australia, cash rate target and release schedule shown on the bank home page, read 29 September 2026 https://www.rba.gov.au/

Market data: Australia