Last week’s shocking inflation result, which saw Australia’s trimmed mean inflation surge by 1.0% in Q3 2025 and the annual rate of inflation rise to 3.0%, has all but eliminated chances of another interest rate cut over the foreseeable future.
As illustrated below by CBA, financial markets now ascribe a near-zero chance of another rate cut:
The impact is already apparent in the housing market, with this weekend’s national preliminary auction clearance rate falling to its lowest level in 22 weeks, according to Cotality.
Based on early results, Cotality reported that only 70% of homes that went to auction over the weekend sold, down from 70.5% last weekend (revised down to 66.7% on final figures):
Source: Cotality
Melbourne’s preliminary clearance rate fell to 66.0%, down from 71.8% the week prior. However, the preliminary auction clearance rate for Sydney rose to 70.6%, up from a softer 68.2% early clearance rate last week.
The national auction market had already shown signs of softening, with the monthly average final clearance rate in October declining to 67%, marking the softest result since June 2025.
Realistically, how far can Australian home prices rise without the stimulus of additional rate cuts, given Australian housing is already among the most expensive in the world?
Will Australia end up following a Canadian and New Zealand-style price bust?
Only time will tell.
