Key Highlights

  • Hunter said higher interest rates are slowing housing, as intended, and tax changes from the May budget are also having an effect.
  • She said the RBA is not trying to achieve a sharp stop or a really big downturn, and is not trying to put people out of their homes.
  • Housing prices have fallen in most capital cities, but the Housing group in the CPI still rose 5.2 per cent over the year.

On prime-time television, the RBA's Assistant Governor (Economic) pointed to two separate influences slowing the property market, and was careful about what the Bank is and is not aiming for.

When Sarah Hunter sat down with 60 Minutes interviewer Adam Hegarty, the conversation inevitably turned to property. In the interview, recorded on 21 October and broadcast on 25 October 2026, the Assistant Governor (Economic) said that higher interest rates are slowing housing, as intended, and that tax changes from the May budget are also having an effect.

That is a notable acknowledgement. It means the Reserve Bank sees the cooling in housing as the product of more than one force: its own policy tightening, and fiscal measures announced by government in the May budget. The interview summary does not set out the detail of those tax changes, and this article does not attempt to. What it does do is look at how the two influences fit together, and what the RBA has said about the limits of its intentions.

Force one: four rate rises in 2026

The first force is the most familiar. As Ms Hunter put it, "the Board have put through four rate hikes this year". The most recent came on 29 September, when the Monetary Policy Board unanimously increased the cash rate target by 25 basis points to 4.60 per cent, effective 30 September. Across 2026 the cumulative increase is 100 basis points.

Higher borrowing costs affect housing through several channels. They reduce how much new buyers can borrow, increase repayments for existing variable-rate borrowers and lower the attractiveness of debt-funded purchases. The Board's September statement noted that "The three increases in the cash rate target since the beginning of the year have tightened financial conditions" and that "housing prices have fallen in most capital cities".

Governor Michele Bullock updated that picture in her opening statement to the Senate Economics Legislation Committee on 28 October. Housing prices have fallen in most capital cities and new housing loans have declined, she said, although prices remain around 50 per cent higher than in early 2020.

Force two: the May budget's tax changes

The second force Ms Hunter identified is fiscal. Tax changes from the May budget are also having an effect on housing, she said. That matters for interpreting the data: not all of the slowdown can be credited to, or blamed on, monetary policy.

It also connects to a broader point Ms Hunter made in the same interview about the relationship between government decisions and the RBA's work. Government spending is part of demand and is included in the Bank's forecasts, she said, but as an independent, unelected body the RBA should not advise on how much governments spend. The Bank takes fiscal settings as part of the environment it forecasts, rather than prescribing them.

When two forces push in the same direction, it can be harder to attribute outcomes to either one. For the Board, the practical question is the combined effect on demand and inflation, which is the variable it targets.

Slowing, not stopping

Perhaps the most important line from Ms Hunter on housing was about intent. "We're not trying to achieve a sharp stop or a really big downturn or anything like that," she said.

That aligns with what the Governor told senators: "monetary policy does not target housing prices." The goal is to return inflation to the 2–3 per cent target range, with the midpoint as reference, while balancing full employment. Housing is a channel, not a target.

Ms Hunter also addressed the human side of the slowdown:

  • Most borrowers entered this period with buffers, such as offset savings.
  • The RBA is not seeing systemic mortgage stress.
  • "We're not seeing signs of lots of people having to sell their home because that's putting them into financial stress."
  • "We're not trying to put people out of their homes."

The Financial Stability Review, released on 1 October, supports that assessment. It found that around 2 per cent of variable-rate owner-occupiers have a cash-flow shortfall, that less than 1 per cent of borrowers are estimated to be in negative equity, and that the median borrower can cover more than a year of scheduled payments from buffers. Investor credit growth picked up over 2025 but has slowed recently.

Why housing cooling does not end the inflation story

A slower housing market does not mean the inflation problem is solved. The Australian Bureau of Statistics reported on 28 October that headline CPI rose 4.3 per cent in the 12 months to September 2026, up from 4.0 per cent in August. Trimmed mean inflation, the underlying measure, was 3.6 per cent, up from a revised 3.5 per cent.

Housing-related costs remain a visible part of that picture. The Housing group rose 5.2 per cent over the year. Within it, rents rose 3.6 per cent and new dwellings 4.7 per cent, while electricity jumped 12.8 per cent, mainly because Commonwealth electricity rebates ended.

Ms Hunter described two overarching challenges for the RBA: an overseas oil shock, and excess domestic demand relative to sustainable supply. She said oil-driven price pressure is still coming through and that things will get "a little bit" worse before they improve. She declined to signal the Board's next decision.

The Governor told senators that "Inflation will therefore likely be higher than was our base case in August," and that the full effects of recent rate rises are yet to be felt. The Board's own guidance, from September, is that it remains open to "increasing the cash rate target further if needed". Its decision on 3 November, due at 2.30 pm (AEDT) alongside a new Statement on Monetary Policy, has not yet been made.

The bottom line

Sarah Hunter's account of the housing market identifies two forces at work: four rate rises in 2026 and tax changes from the May budget. Together they are slowing a market where prices have fallen in most capitals and new lending has declined. Her message was that the RBA wants a slowdown, not a sharp stop, and that it is not seeing systemic mortgage stress. But with headline inflation at 4.3 per cent and underlying inflation at 3.6 per cent, a cooler housing market is only one input into a Board decision that remains open until 3 November.