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Governor Michele Bullock told a parliamentary committee in September that the Reserve Bank does not aim at housing prices, even as she acknowledged that prices remain far above their pre-pandemic level.

Housing is never far from the conversation when interest rates rise. Home prices, mortgage repayments and rents shape how many Australians experience monetary policy, and it is common to hear rate decisions discussed as though they were mainly about the property market.

Governor Michele Bullock pushed back on that framing when she appeared before the House of Representatives Standing Committee on Economics on 18 September 2026. In her opening statement she said, in six plain words: "Monetary policy does not target housing prices."

The remark is worth unpacking, because it clarifies what the Reserve Bank of Australia (RBA) is trying to achieve, and what it is not.

What the Governor told the committee

Ms Bullock's statement covered the housing market in some detail. She told MPs: "Housing prices are still around 50 per cent higher than they were in early 2020." She also said housing prices have fallen in most capital cities.

She then made the distinction that gives this article its headline. Whatever is happening to prices, they are not what the cash rate is set to achieve.

On household finances, she said: "The share of borrowers in negative equity remains very limited and only a small share are facing severe difficulty with their loan repayments."

What the RBA is targeting instead

If not housing, then what? The same opening statement left no doubt. "Inflation is too high. We are focused on getting it back down and making sure that it does not become embedded," the Governor said.

The RBA's target is consumer price inflation of 2–3 per cent, aiming for the 2.5 per cent midpoint. The August monthly CPI indicator showed headline inflation at 4.0 per cent. Ms Bullock said separately on 29 September that underlying inflation has been about 3.5 per cent for the past six months.

She also explained to the committee what she believes is needed to get there: "A period of subdued growth of aggregate demand is needed to reduce capacity pressures and bring inflation down sustainably."

Eleven days after the hearing, on 29 September, the Monetary Policy Board raised the cash rate target by 25 basis points to 4.60 per cent. The considerations highlighted in the Board's statement centred on energy prices, fuel costs, technology-related goods and short-term inflation expectations, which it said "remain elevated".

Why housing still matters to the RBA

Saying that monetary policy does not target house prices is not the same as saying the RBA ignores housing. The RBA's Financial Stability Review examines housing from a different angle: household resilience and the stability of the financial system.

The October 2026 edition of the Review (FSR), released on 1 October, illustrates this. Among its findings:

  • Less than 1 per cent of borrowers are estimated to owe more on their loan than the value of their property.
  • The share of variable-rate owner-occupier borrowers in cash flow shortfall "remains relatively low at around 2 per cent".
  • "The aggregate share of new high DTI lending remains well below APRA's recently implemented limits of 20 per cent".
  • Offset and redraw buffers leave the median borrower able to cover over a year of scheduled mortgage payments at current interest rates, a stronger position than before the pandemic.
  • Housing credit growth has eased recently, particularly for investors.
  • The interest-only share of lending has increased over the past year, which by itself is not cause for concern, according to the Review.

These findings speak to resilience rather than price levels: whether borrowers can keep paying and how much risk is building in new lending. On that front, the FSR's overall view was that "Most Australian households with mortgages remain well placed to manage more difficult conditions".

Other RBA officials have made related points. Assistant Governor (Economic) Sarah Hunter said on The Pay Off podcast on 22 September that rents move with demand and supply in local markets, not automatically with interest rates. That is a reminder that the link between the cash rate and housing costs is less direct than it might appear.

Ms Hunter also described the recent housing downturn of around 3 per cent as modest, given prices rose about 50 per cent from late 2019. Deputy Governor Andrew Hauser told ABC 7.30 on 8 September that house prices were up about 3 per cent over the year and about 50 per cent since the start of the decade.

Taken together, these comments describe a housing market that has risen strongly over several years and has eased more recently in most capital cities. None of them suggest the RBA is setting rates to push prices to a particular level.

Why the distinction matters for households

The Governor's reminder has a practical edge. When the cash rate rises, it affects borrowers through higher repayments, and Ms Bullock acknowledged on 29 September: "I know this decision is difficult for households with a mortgage and businesses with loans."

But on the Governor's account, the purpose is to bring inflation back to target, not to deliver a particular housing outcome. Readers following the housing market may find it more useful to watch the inflation data, including the next CPI update on 28 October, and the Board's next decision on 3 November, than to treat each rate move as a verdict on house prices.

The bottom line

Ms Bullock's message to federal MPs was clear: "Monetary policy does not target housing prices." The RBA's goal is inflation of 2–3 per cent, and the cash rate is set with that objective in mind. Housing still matters to the Bank, but chiefly as a question of household resilience and financial stability, where the latest FSR found negative equity below 1 per cent and high-DTI lending well below APRA's limit. Prices, the Governor noted, remain around 50 per cent above early 2020 even after recent falls in most capital cities.