Sunita Somvanshi
Karmactive Staff
The Reserve Bank of Australia (RBA) holds its cash rate at 4.10% as of April 2025, with markets pricing a 95% chance of a rate cut at the May 20 meeting.
Money in Your Pocket
Compare the Market analysis shows households earning $200,000 per year could see their borrowing power increase by $100,600 if the cash rate drops 1% in the coming months.
Real estate expert Andrew Winter notes: “These markets have performed well in less-than-ideal conditions. Another round of rate cuts will add fuel to the fire.”
State-by-State Impact
Queensland
- New Farm homeowners (average house price: $2.87m) could save:
- $367 monthly with 0.25% cut
- $729 monthly with 0.50% cut
- Gold Coast median-priced house savings: $158 monthly (0.25% cut)
- Sunshine Coast savings: $146 monthly (0.25% cut)
New South Wales
Over 250 Sydney suburbs could see $400+ monthly savings with rate cuts. Mortgage Choice data shows NSW buyers get about $45,000 extra borrowing power with a 0.50% cut. Sydney’s median house price hit $1.118m in April after February’s rate cut.
Victoria
Melbourne buyers with the state’s average $628,000 home loan would see borrowing capacity increase to:
- $645,000 with 0.25% cut
- $663,000 with 0.50% cut
- $701,000 with 1.00% cut through 2025
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South Australia
Even affordable suburbs see benefits:
- Salisbury unit owners ($421,843 median):
- Save $54 monthly (0.25% cut)
- Save $107 monthly (0.50% cut)
- Salisbury East unit owners:
- Potential savings: $118 (0.50% cut)
Market Reality Check
KPMG urban economist Terry Rawnsley brings perspective: “It’s not going to be a boom market by any stretch of the imagination. People are really stretched at their budgets, and there’s not much upwards capacity for people to find more money to put into housing.”
First-time buyers Nikki and Matt recently bought in Adelaide, motivated by potential rate cuts. Nikki shares: “When you’re growing up, you think of a million-dollar home as being like a mansion [but] now a million dollars doesn’t really get you much anymore.”
Current Market Snapshot
- National home prices: Up 3.71% (12 months to early May)
- Capital cities: 3.35% growth
- Average price increase: $26,800 on $800,000 homes
- Auction clearance rates: 65% in early May (highest since July 2024)
- Million-dollar homes: One in three properties nationwide
Property buyers and investors should monitor upcoming RBA decisions as rate changes influence the housing market.
