The RBA leaves rates on hold at its August 2026 meeting, giving mortgage holders a short break from rising repayments. However, the relief may not last long. Just as the Reserve Bank signalled that another hike is still possible, a major bank has warned that property prices could slump by almost 15 per cent in some cities. Together, these two updates paint a mixed picture for the Australian economy, and homeowners want to know what comes next.
What the RBA Decided and Why It Matters?
Cash Rate Stays at 4.35 Per Cent
The Reserve Bank of Australia held its cash rate steady at 4.35 per cent on Tuesday. This is the second hold in a row, following three back-to-back hikes earlier in the year. As a result, borrowers on variable loans will not see their monthly repayments rise this month. That said, the pause does not undo the impact of the earlier increases, which already added meaningfully to household budgets.
Governor Michele Bullock explained that inflation remains too high for comfort. Therefore, the board wants more proof that price pressures are easing before it moves further. In addition, softer inflation data released in late July gave the RBA enough room to hold steady this time.
Why the Door Is Still Open for a Hike?
Even so, the central bank has not ruled out another increase. Bullock said the board “remains concerned” about the inflation outlook and needs to see continued progress. Meanwhile, a survey of economists found that most experts expect a hold today, yet nearly half still think one more hike could land before the end of 2026.
Furthermore, risks like global oil price swings and ongoing conflict in the Middle East could push costs higher again. Consequently, the RBA is keeping a “tightening bias,” meaning it is ready to act quickly if inflation does not keep falling.
Major Bank Warns of a Sharp Property Price Slump
While the RBA held rates, a leading bank delivered a separate and worrying update. Property values across Australia’s major cities are expected to fall sharply, and in some markets, the decline could approach 15 per cent from recent peaks.
How Much Could Prices Fall?
Banks and analysts have sharply revised their forecasts downward in recent weeks. Here is a quick snapshot of the latest predictions:
| Source | Forecast |
| National Australia Bank | Sydney prices down around 10% in 2026 |
| National Australia Bank | Melbourne prices down around 9% in 2026 |
| HSBC | National prices down up to 8% by end of 2027 |
| KPMG | Sydney down 4.4%, Melbourne down 5% in 2026 |
These numbers are notably worse than forecasts issued just a month earlier. As a result, economists say the housing slowdown has “accelerated” faster than expected.
Which Cities Are Most at Risk?
Sydney and Melbourne are leading the downturn. Both cities have already recorded price falls over the past quarter, driven by tighter lending conditions and cooling buyer demand. Meanwhile, changes to negative gearing and the capital gains tax discount are also weighing on investor appetite. Consequently, fewer investors are entering the market, which adds further pressure on prices.
On the other hand, some smaller capital cities have shown more resilience. Nonetheless, analysts warn that a broader slowdown could still spread if borrowing costs stay elevated for longer.
What This Means for Homeowners and Buyers?
So, what should everyday Australians take from all this? First, if you already have a mortgage, today’s hold offers short-term breathing room. However, you should not assume rates will fall soon. Most major banks do not expect a cut until 2027.
Second, if you are planning to buy, a softer property market could open the door to better deals. Still, it is wise to speak with a licensed mortgage broker or financial adviser before making any big decision, since every household’s situation is different.
Finally, keep an eye on upcoming inflation and jobs data. These figures will heavily influence the RBA’s next move, and in turn, they will shape where property prices head next.
Final Thoughts
In short, the RBA leaves rates on hold for now, but it has not closed the door on further hikes. At the same time, a major bank’s warning of a potential property price slump shows just how much uncertainty remains in the housing market. Therefore, staying informed and reviewing your loan or investment plan regularly is more important than ever this year.
