With inflation easing faster than expected and wage pressures softening, the Board saw an opportunity to reduce monetary restrictions while still keeping inflation in check.
However, uncertainty remains, with the RBA reporting labour market conditions are still tight, and economic growth is recovering more slowly than anticipated.
For real estate agents, this move could reignite buyer confidence after a period of higher borrowing costs.
Lower rates typically increase affordability, particularly for first-home buyers and upgraders, while also driving more activity in investment markets.
Agents should be prepared for a potential shift in market sentiment, with more buyers returning and competition heating up in key markets.
Here’s what our experts had to say:
Real Estate Institute of Australia President, Leanne Pilkington
“The 0.25 percentage point cut would, if passed on in full, will reduce repayments on a $600,000 mortgage by $100 a month.
The rate cut is due, in large part, to the lower-than-expected inflation reports over the last two months.
The CPI in the December quarter 2024 at 0.2 per cent and 2.4 per cent over the twelve months was the lowest since March 2021 and below market expectations.
With the market expecting further cuts during 2025 more relief for borrowers can be anticipated.
Affordability will also improve with the proportion of family income required to service their loan dropping by 1 percentage point for each cut in interest rates of 0.25 per cent, from the current historically high level of 48.6 per cent.
With house prices moderating and real wages growing at their fastest rate in a decade, further improvements in affordability can be expected during 2025.
It is now up to the banks to pass the cut on in full without delay.”
Nerida Conisbee Ray White Group, Chief Economist
“Inflation has now been within the Reserve Bank of Australia’s (RBA) target for two quarters and finally they have decided to cut.
So why the cut now? Unemployment in December rose more quickly than expected and it now appears that not only are households feeling the pinch, but so too are businesses, impacting their hiring decisions. This cut is aimed at reducing borrowing costs and providing more momentum into the economy.
It’s expected that this will be the first cut of many. At this point, it is likely we will see three more cuts this year, however there continues to be rising uncertainty.
Trade disruptions are expected throughout the year as a result of US tariffs, and Middle East conflict may bring an end to the lower fuel prices we have seen in recent months. Both of these have the potential to re-ignite inflation and could bring an abrupt end to interest rate cuts.
For housing, it’s likely to lead to strong pricing conditions. Although the market slowed at the end of last year as a result of more homes coming up for sale, we had already seen signs of recovery in January. The downturn appears to have already been reversed and this will provide more momentum into the market.”
Eleanor Creagh, REA Group Senior Economist
“Although the unemployment rate remains low, the undershoot in inflation has allowed the Reserve Bank to begin its rate-cutting cycle today, with increased confidence that underlying inflation is on track to return sustainably to target.
“The PropTrack Home Price index showed national home prices fell 0.08% in January. While housing demand remained resilient to affordability constraints in 2024, the pace of home price growth slowed throughout the year. This culminated in small falls over the past two months as the softer end to 2024 carried over into the new year.
“Both buyer confidence and borrowing capacities will be boosted now interest rates have begun to fall. As a result, the price falls seen over the past two months are likely to be short lived and may reverse with the slight improvement to affordability and buyer confidence driving renewed demand and price growth.
“Housing affordability is at the worst level in three decades which means the price uplift could be more muted compared to previous easing cycles. This rate cutting cycle is expected to be shallow, resulting in the pace of home price growth trailing the strong performance of recent years.”
Anthony Webb, Head of Victoria for Belle Property and Hockingstuart
“The RBA’s decision to cut the cash rate will boost confidence among buyers who have held off on purchasing over the past few years. While the rate cut provides some immediate reassurance, its effect on borrowing capacity will only become significant after multiple cuts. As a result, significant property price fluctuations will depend on how many additional reductions the RBA makes this year.
The timing of the RBA’s decision is opportunistic for sellers, given the upcoming federal election. We usually see a softening in market activity in the lead-up to voting time, which, in concert with the cut to the cash rate, creates a unique window of time for sellers to put their homes on the market and capitalise on current conditions to achieve strong results.”
Domain Chief of Research and Economics, Dr Nicola Powel
“It’s the relief that Australia has been waiting for.
We’re entering a rate loosening cycle, but one rate cut alone probably won’t completely shift the landscape for homeowners or buyers.
The RBA is likely to wait until mid-year before making any further decisions, but today’s cut will help ease the pressure on holding debt, boosting housing activity and sales as borrowing power improves.”
The Agency’s CEO of Real Estate Matt Lahood
“We have seen a strong start to real estate sales in 2025 due to momentum gathering speed about the likelihood the RBA would cut interest rates.
Buyers who missed out on properties in 2024 have been more aggressive in securing a home particularly at auction and investors are out in numbers in an attempt to get ahead of what they believe will be an even greater influx of buyers and sellers post today’s announcement of lowering interest rates.
Sentiment is more positive than last year and the wait and see approach is no longer relevant to buyers and sellers alike. It is important to note that it may take about 60 days for the true impact of this decision to come to light with buyers needing to go back to their mortgage brokers and banks to revise their borrowing power. We also eagerly await how much of this interest rate reduction the banks will pass on to consumers.
We should also recognise that now more than ever conditions differ from suburb to suburb particularly in capital cities and it is essential for those who are looking to sell or buy to speak to their local real estate expert to understand their unique market.”
LJ Hooker Group Head of Research, Mathew Tiller
“This extended period of high interest rates has heavily and disproportionately affected
mortgage householders, so this is welcomed news, particularly for families who have been
feeling the pressure.
Strong capital gains meant we didn’t see the wave of forced sales that was initially feared
would happen at the start of the cycle; people showed they could adjust their household
budgets or, in some cases, sell and downsize their mortgage.
Initially, we expect to see a boost from those who have finance already approved; they will
look to increase their borrowing capacity and jump straight back into the market. And
although it may take a little while for the banks to pass on the cut, it is likely to bring an
increased activity with buyers looking to refinance or gain pre-approval.”
Angus Raine, Executive Chairman of Raine & Horne
“This rate cut is precisely what the property market needed.
The pent-up demand we’ve been seeing since the end of 2024, combined with more affordable borrowing conditions provided by lower interest rates, will drive activity in the market this autumn.
We’ve been predicting a vibrant autumn property market, and now with this rate cut, I’m confident the market bounce back will happen sooner rather than later.
It’s surprising that some commentators claim this rate cut won’t immediately impact real estate activity. In my view, that perspective doesn’t account for the substantial buyer demand that has been building, and with today’s move by the RBA, buyers will now be more motivated to act.”
Mr Raine predicts that this rate cut “will also spur on sellers to list their property”.
“Our January data recorded a significant rise in appraisals and listings, indicating that vendors are confident the market will respond positively to the rate cuts.
“A 30% year-on-year (YOY) increase in appraisal values and a 14% rise in listing values reflect a strong outlook as we enter a market cycle set to benefit from rate cuts.”
Oliver Hume Chief Economist, Matt Bell
“This is a brave new world for property markets. Currently, the market has only two more
25bps cuts priced in for 2025, suggesting a historically gradual and potentially shallow
easing cycle.
However, this follows the most aggressive rate-rising cycle on record, at a time when a chronic undersupply has allowed prices to perform well across most markets.
While this single rate cut won’t have a massive direct impact on affordability, the shift into the
easing cycle could have a more significant impact on activity, with consumers building potential future rate cuts into their housing budgets.
At Oliver Hume, we’ve already seen improved levels of enquiry and activity since late January as a direct result of rate cut expectations.
The market typically underestimates the impacts of interest rate changes on prices and
activity levels. Now that the easing cycle has started, we expect increased activity across
established and new housing markets.”
