Last week, the Reserve Bank of Australia (RBA) cut the official cash rate by 0.25% to 3.60%, the third rate cut this year.
Recent research from the Australian Financial Review showed that Australian home values typically rise by double-digit rates two years after the beginning of a rate-cutting cycle.
This weekend’s preliminary auction results suggested that buyers have rushed into the market in response to the latest rate cut.
At the national level, 75.0% of homes taken to auction sold based on early results, 3.4% higher than last week, and the highest preliminary clearance rate since the first week of April last year (75.9%).
Source: Cotality
The lift in preliminary clearance rates was broad-based, with all capital cities recording an increase from last week.
Melbourne reported a preliminary auction clearance rate of 75.5%, 4.6% above last week’s and the highest result since the final week of July, when the preliminary clearance rate hit 76.3%.
Sydney recorded a preliminary clearance rate of 75.0%, the highest result since the week ending July 13 and the third highest result of 2025.
Cotality’s daily dwelling values index has begun to track higher, led by Sydney.
Financial markets are now leaning towards another three 0.25% rate cuts by the middle of 2026, which would take the cash rate to 2.85%.
Combined with the Albanese government’s 5% deposit scheme for first home buyers, which comes into effect on 1 January 2026, such rate cuts will inevitably drive buyer demand and prices higher.
