Buried in the Board's latest statement is a plain acknowledgement that the housing market has turned down, yet the RBA insists property prices are not what it is aiming at.

Central bank statements are usually measured, so the choice of words matters. In announcing a 25-basis-point rise in the cash rate target to 4.85% on 3 November 2026, the Reserve Bank's Monetary Policy Board did not soften its description of the property market. "The economy is slowing, housing prices have fallen significantly and the Unemployment rate has risen," the statement said.

"Significantly" is a notably direct word. Its appearance in the same sentence as a slowing economy and rising unemployment signals that the Board sees the housing downturn as a real feature of the outlook, not a passing wobble.

The Board raised rates anyway, by a 6–3 majority. Six members voted to lift the cash rate from 4.60% to 4.85%, effective 4 November, while three voted to hold. It was the fifth increase of 2026 and brings cumulative tightening for the year to 125 basis points.

What the RBA has said about property

The acknowledgement in the November statement builds on comments from Governor Michele Bullock a week earlier. In her opening statement to the Senate Economics Legislation Committee on 28 October, she said: "Housing prices have fallen in most Capital cities and new housing loans have declined."

Bullock also offered some longer-run context, noting that housing prices remain around 50% above early 2020 levels. In other words, recent falls have come off a very elevated base.

Several of the RBA's November messages point the same way:

  • the statement expects that "Higher interest rates and falls in housing prices and turnover are expected to weigh on growth";
  • the November Statement on Monetary Policy (SMP) says "Tighter monetary policy alongside a weaker outlook for the housing market is expected to keep GDP growth below trend";
  • the SMP forecasts GDP growth of 1.6% over the year to December 2026, slowing to 1.3% by December 2027.

Those growth figures are forecasts, and the RBA has stressed heightened uncertainty around the outlook.

"Monetary policy does not target housing prices"

If property values are falling and the Board knows it, why keep raising rates? Bullock addressed the point directly in her Senate statement: "monetary policy does not target housing prices."

The Board's stated aim is to bring Inflation sustainably back to its 2–3% target, aiming for the midpoint. On that score, the data remain uncomfortable:

  • monthly headline CPI rose 4.3% over the year to September 2026;
  • trimmed-mean inflation, the RBA's preferred underlying measure, was 3.7% over the year to the September quarter, and 1.0% in the quarter.

The Board said "Inflation remains elevated and recent data indicate that it is broadly based." It also warned that "there is an increasing risk that higher inflation expectations will become embedded."

From the Board's perspective, a weaker housing market is part of how tighter policy feeds through to the wider economy, rather than a target in itself. Falling prices and lower turnover can dampen activity, which in turn eases Demand pressures. The statement's own words about housing weighing on growth reflect that mechanism.

How exposed are homeowners to falling prices?

A natural concern when prices fall is negative equity, where a borrower owes more than the property is worth. The RBA has examined this risk closely.

The minutes of the September meeting found that very few borrowers would be in Negative equity even if housing prices fell 20%. Bullock's observation that prices remain around 50% above early 2020 levels is relevant context here.

The minutes also recorded that fewer than 2% of owner-occupier borrowers had a Cash Flow shortfall, and that scheduled Mortgage payments were about 10% of household disposable income, around their 2024 peak.

The October Financial Stability Review judged that "Most Australian households with mortgages remain well placed to manage more difficult conditions" and that "Australian banks are well positioned to continue lending, even in a downturn."

Those reassurances are about the system as a whole. Recent buyers who purchased near the peak with small deposits would generally be more exposed to price falls than long-standing owners, and averages do not capture their position.

What it means for the outlook

The housing slide forms part of a broader picture of a slowing economy. The SMP forecasts unemployment rising from 4.4% in June 2026 to 4.7% by December 2026 and 5.1% by December 2028. The statement noted that "the unemployment rate is projected to rise by more than expected in the August forecasts."

The SMP also described the economy as "currently operating with excess demand", judged to reach balance next year. A weaker housing market is one of the forces expected to help close that gap.

Assistant Governor Sarah Hunter, in an interview aired on 25 October, emphasised that the RBA's intentions are limited: "We're not trying to put people out of their homes."

The Board's next decision is scheduled for 2.30 pm on 8 December 2026.

The bottom line

The RBA's November statement openly acknowledges that "housing prices have fallen significantly", echoing Bullock's earlier comment that prices have fallen in most capital cities and new housing loans have declined. Even so, the Board raised the cash rate to 4.85%, consistent with Bullock's point that "monetary policy does not target housing prices." The RBA expects falling prices and turnover to weigh on growth, while its September minutes suggested very few borrowers would face negative equity even after a 20% fall. Homeowners or buyers weighing their own circumstances can consider speaking with a licensed adviser or their lender.