Why Rate Cuts Are Further Away Than Most Borrowers Think

With underlying inflation rising to 3.6% and housing costs up 6.5% annually, HTW's June analysis shows rate relief is still some way off.

Borrowers who have been expecting the Reserve Bank to ease repayments with near-term rate cuts are facing a difficult reality check. The latest property market analysis from Herron Todd White (HTW) confirms what the monthly inflation data has been signalling: the economic conditions required for rate relief are not yet in place. Understanding why — and what it means for strategy — is more useful right now than waiting for a cut that may be further off than most expect.

The Inflation Keeping the RBA on Hold

The most important number in HTW's June 2026 Month in Review is not a property price — it is an inflation figure. Housing costs are running at 6.5% annually to May 2026, according to ABS data, making housing the single largest contributor to Australia's Consumer Price Index.

That matters because the RBA's preferred measure — the trimmed mean — moved in the wrong direction in May, rising to 3.6% from 3.4% in April. Headline CPI eased to 4% annually over the same period, but headline easing does not automatically translate into rate relief. The trimmed mean is what the RBA watches most closely when assessing whether inflation is genuinely under control, and at 3.6% it remains well above the 2–3% target band.

HTW chief executive Peter Maloney noted that the rise in underlying inflation suggests policymakers "will remain cautious about rate cuts any time soon." Three cash rate increases in 2026 have brought the cash rate to 4.35%, where the RBA held it at the June meeting. The case for a further hike has not been fully dismissed, with the data over the next few months expected to be decisive.

The recently passed negative gearing and capital gains tax reforms add a further layer of complexity for investors. HTW's assessment is that while the reforms will dampen near-term investor enthusiasm for established dwellings, the structural floor under prices is unlikely to give way completely: "above-average immigration and a stubborn failure to hit dwelling construction targets mean price impacts are likely to be targeted to specific products in specific locations" rather than broad-based.

What $1 Million Actually Buys in Each Capital City

HTW national director Chris Hinchliffe observes that a seven-figure budget "has rapidly shifted from a luxury purchase to the new baseline for standard family homes in most of our major capital cities." The gap between what a $1 million budget signals and what it actually delivers has never been wider, and the answer varies materially by city.

**Sydney:** The lower-quartile rose 1.5% over the three months to April, supported in part by the federal government's 5% deposit scheme. The top quartile fell 2.7% over the same period. At $1 million, buyers generally face a choice between a house on the outer fringe or a unit in an inner-ring location.

**Melbourne:** The relative value story of the capitals. Several suburbs that previously sat above $1 million have dropped below it, which may represent genuine opportunity for upgraders who have been waiting.

**Brisbane:** Inner-ring attached housing remains strongly contested. A $1 million budget still faces real competition close to the CBD.

**Perth:** HTW describes $1 million as now "the standard benchmark for a metropolitan family home" — and potentially just the entry point for a unit in a prime location.

At the prestige end, HTW's national Prestige Index sits at 61 out of 100 in June, down from 66 at its February launch. Sydney and Melbourne both sit at 40 (in balanced territory), while Perth surged to 80. Adelaide set a new residential price record of $15.5 million at Medindie in May, even as its prestige index eased from 75 to 70.

Where to Direct Your Strategy Now

The core message from HTW is strategic rather than alarming. Waiting for rate cuts is itself a choice — one with real costs if cuts are months away and prices in your target market continue to shift.

**For buyers**, HTW frames the decision as a strategic exercise: choosing between "Sydney's resilient lower-tier units, Brisbane's high-demand inner fringes, Perth's tightly held family footprint or maybe what is starting to look like value for money in Melbourne." Use a [borrowing power calculator](/calculators/borrowing-power) to understand what your current serviceability delivers before narrowing your search. Check [competitive home loan rates](/home-loans/cheapest) to ensure you are starting from the sharpest possible position.

**For investors**, HTW highlighted a useful case study in Mildura: splitting a $1 million budget across two properties in the $480,000–$520,000 range can deliver better rental diversification and yield than a single purchase. This structure is worth modelling if you are open to a portfolio approach — compare current lending conditions on the [investor home loans hub](/home-loans/investor).

**For anyone approaching a fixed-rate expiry**, the prospect of a timely rate cut rescue is uncertain enough that refinancing onto a competitive variable rate now deserves serious consideration. Use the [refinance savings calculator](/calculators/refinance-savings) to model the difference between your current rate and market alternatives, then explore options in the [refinance hub](/home-loans/refinance) before your fixed period ends.

The inflation data, the RBA's caution, and HTW's market-by-market analysis all point to the same practical conclusion: knowing your own position clearly and acting on that clarity is more productive than waiting for macro conditions to deliver relief on a timeline you cannot control.

[Source: Australian Broker, "$1 million is the new floor — and the RBA isn't riding to the rescue", 30 June 2026](https://www.brokernews.com.au/news/breaking-news/1-million-is-the-new-floor--and-the-rba-isnt-riding-to-the-rescue-289595.aspx)