A single, carefully hedged sentence from Assistant Governor Christopher Kent suggested the RBA's rate rises were not the only force weighing on demand for existing homes this year.

Central bankers choose their words with care, and the qualifiers often matter as much as the claims. On 13 August, in his remarks in Sydney, Assistant Governor (Financial Markets) Christopher Kent offered an observation that went beyond interest rates.

"tax changes announced in the federal budget appear to have contributed to reduced demand in the established housing market," he said.

It was a brief remark inside a longer discussion, titled "The Restrictive Stance of Monetary Policy", about whether the Reserve Bank's tightening was working. But it raised an important question for anyone trying to read the housing market: how much of the slowdown reflects monetary policy, and how much reflects other factors?

Reading the sentence closely

Three features of Kent's comment stand out.

  • "Appear to have." This is cautious language. Kent did not say the tax changes caused the slowdown, only that they seemed to have played a part.
  • "Contributed to." The tax changes were presented as one contributor among several, not the sole driver.
  • "The established housing market." Kent singled out demand for existing dwellings, rather than housing as a whole.

The quoted sentence does not put a number on the effect. Nor is this article in a position to detail the specific measures; the point Kent made was about their apparent impact on demand, and that is where the RBA's analysis is focused.

The housing story Kent was telling

The tax comment came alongside a broader account of a market losing momentum. In the same remarks, Kent said:

  • "Housing prices have declined in Sydney and Melbourne, with declines becoming increasingly broad-based."
  • "Growth of new housing loans has fallen significantly."
  • "forward indicators such as auction clearance rates have also declined to be below their long-run averages."
  • "housing credit growth, which moves closely with housing prices, has started to slow."

He tied much of this to monetary policy. At the time, the cash rate was 4.35 per cent after quarter-point increases on 3 February, 17 March and 5 May. Kent said "the three cash rate increases earlier this year are having their intended effects" and that "Scheduled mortgage payments have risen and are now close to their 2024 peak as a share of household disposable income."

The August Statement on Monetary Policy, published the same month, recorded national housing prices down 1.6 per cent from their March peak.

Why the distinction matters for the RBA

If tax changes are also restraining housing demand, that has implications for how the Board interprets the data.

The RBA uses housing indicators, among many others, to gauge whether its policy is having the desired effect on spending and inflation. If part of the cooling is due to fiscal settings rather than interest rates, then housing weakness on its own may overstate how much traction monetary policy is getting.

Kent did not draw that conclusion explicitly, and it would be a mistake to put words in his mouth. But his framing made clear that the RBA was separating out the influences on housing rather than attributing every soft reading to the cash rate.

It also highlights a broader theme: monetary policy is not the only lever affecting household behaviour. Governor Michele Bullock made a related point about the limits of the RBA's tools at her 29 September media conference, though on a different subject. "monetary policy can't do anything about productivity," she said. The common thread is that the Bank is careful to distinguish what its policy can and cannot influence.

What happened next

The housing signals persisted after August. On 18 September, Bullock told the House of Representatives Standing Committee on Economics in Canberra: "Housing prices have fallen in most capital cities and new housing loans have declined." She also noted "housing prices are still around 50 per cent higher than they were in early 2020."

On 29 September, the Monetary Policy Board nonetheless raised the cash rate by 25 basis points to 4.60 per cent, the fourth increase of 2026. The Board's statement said housing prices have fallen in most capital cities, new housing loans have declined noticeably, and the effects of the housing downturn are uncertain.

Its reasons for tightening lay elsewhere. The statement said inflation remains elevated, that recent outcomes were stronger than expected, and that some upside risks flagged in August were materialising, including higher global energy prices and firms raising or planning to raise prices. Bullock summed it up: "Inflation is too high and has been driven by domestic capacity pressures."

That sequence is instructive. Whatever combination of tax changes and higher rates has cooled established housing, it was not enough on its own to persuade the Board that inflation was on track. The monthly CPI indicator showed headline inflation of 4.0 per cent over the year to August, while underlying inflation, measured by the trimmed mean, was 3.6 per cent over the year to the June quarter.

A cooler market also raises questions about borrower resilience. The RBA's October 2026 Financial Stability Review found negative equity affects "less than 1 per cent of borrowers", and that under a further 20 per cent price fall "only around 5 per cent of mortgages would fall into negative equity". It also reported that arrears on loans 90 or more days past due have risen slightly but remain "around pre-pandemic levels". Most mortgage households, the review's media release said, are well placed to cope even with a sharp fall in house prices, though there are some pockets of stress.

The bottom line

Kent's remark in Sydney on 13 August was short and deliberately hedged, but it carried a clear message: the RBA believed federal budget tax changes appeared to have contributed to weaker demand for established homes, alongside the effects of three rate rises earlier in 2026. The sentence itself did not quantify that contribution.

For readers following the housing market, it is a reminder that falling prices and slower lending can reflect several forces at once. For the RBA, the softer housing picture did not change its focus. The Board lifted rates again in September because inflation remains too high, and Bullock has declined to offer forward guidance on what comes next. The next decision is due at 2.30 pm on 3 November, and Kent is scheduled to speak again on 18 and 19 October.