Interest rates: a pause after three rises
The Reserve Bank board left the cash rate target at 4.35% on 16 June. Its statement describes the decision as unanimous. The pause followed increases of 0.25 percentage points at each of the year's first three meetings, in February, March and May, which lifted the rate from 3.60% at the end of 2025.
In its statement the board said inflation is still too high, that higher fuel prices are feeding into other prices, and that it would raise the rate further if required. There was no board meeting in July. The next decision is due on 11 August.
Inflation, jobs and growth
The ABS Consumer Price Index, Australia, for June 2026, released on 29 July, showed annual inflation of 3.8%. That is down from 4.0% in May and from 4.6% in March. The release also reports annual trimmed mean inflation, an underlying measure, at 3.6%, unchanged from May. Prices fell 0.1% over the month. Housing was the largest contributor to the annual result, up 6.8%.
The seasonally adjusted unemployment rate was 4.4% in June, according to the ABS labour force survey released on 23 July. Seasonally adjusted employment rose by 76,300 people (0.5%). The ABS advises caution with single-month movements and points to trend data as the better guide to underlying conditions.
The latest GDP figure available is for the March quarter, released on 3 June. In seasonally adjusted chain volume terms, the economy grew 0.3% in the quarter and 2.5% over the year to March. June quarter figures were not yet out at the end of July.
Sentiment: lifting, from a low base
The Westpac-Melbourne Institute consumer sentiment index rose 4.1% in July to 83.9, from 80.6 in June (released 14 July). A reading of 100 would mean optimists and pessimists are evenly balanced, so households remain on the gloomy side.
The NAB business survey for June, also released on 14 July, showed business confidence rising 9 points to -5. NAB described it as the third consecutive monthly rise. Business conditions held at +3, below the long-run average of +7.
Home values: the largest monthly fall in Cotality's index since late 2022
Cotality's national Home Value Index fell 0.4% in June. Cotality said this was the largest month-on-month fall since December 2022. Sydney led the fall at 1.2%, followed by Melbourne at 1.0%.
Over the June quarter, Sydney values dropped 3.2% and Melbourne 2.6%. Cotality puts the Sydney median dwelling value at $1,265,608, up 0.3% on a year earlier, and the Melbourne median at $808,486, down 0.9% on a year earlier. Brisbane (up 0.3%) and Perth (up 0.7%) still rose in June, while Adelaide was unchanged.
Cotality pointed to other weak measures in the same 1 July release. It said the combined capital cities auction clearance rate had held below 50% since the last week of May and dropped to the low 40% range from late June. It estimated capital city home sales over the three months to June at 16.2% below the same time last year, and advertised supply across the capitals at almost 11% above a year ago. Cotality's research director said the higher listings reflect less demand rather than more new listings coming to market. He also said affordability hurdles were weighing on buyers even before the 75 basis points of rate rises, and named cost-of-living pressures, pessimistic sentiment and the property taxation changes announced in the federal budget as further factors.
Reading the numbers
Three points are worth keeping in mind. First, the Cotality index is a broad measure of dwelling values across each city, so it does not say what any single new project will sell for. Second, monthly figures get revised: Cotality noted that its latest update lowered recent months. Third, a contract signed off the plan usually settles after the building is finished, so the market at signing and the market at settlement can differ.
The next scheduled releases are the RBA decision on 11 August and Cotality's July Home Value Index in early August.
General information only, not financial or credit advice.
Sources
- RBA, Statement by the Monetary Policy Board, 16 June 2026: https://www.rba.gov.au/media-releases/2026/mr-26-15.html
- RBA, Cash Rate Target history: https://www.rba.gov.au/statistics/cash-rate/
- RBA, 2026 interest rate decisions (meeting dates): https://www.rba.gov.au/monetary-policy/int-rate-decisions/2026/
- ABS, Consumer Price Index, Australia, June 2026: https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/jun-2026
- ABS, Labour Force, Australia, June 2026: https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/jun-2026
- ABS, Australian National Accounts, March 2026: https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/mar-2026
- Cotality, Housing market downturn deepens as demand headwinds build (1 July 2026): https://www.cotality.com/au/insights/articles/housing-market-downturn-deepens-as-demand-headwinds-build
- Westpac IQ, Consumer Sentiment, July 2026: https://www.westpaciq.com.au/economics/2026/07/consumer-sentiment-july-2026/
- NAB, Monthly Business Survey, June 2026: https://www.nab.com.au/news/economy-markets/business-confidence-continues-recovery-nab-monthly-business-survey-june-2026