RBA Says Housing Market Eased More Than Expected

Short summary

Reserve Bank Governor Michele Bullock said on 28 July that Australia's housing market had eased by more than the RBA expected in its May forecasts.

The RBA described the fall in established housing prices as modest and concentrated in Sydney and Melbourne. It also estimated that negative equity affected less than 1% of borrowers in the most recent data available for the speech.

These national findings do not value a particular home or predict the next cash rate decision. Use the Home Equity and LVR Calculator with a current property-value estimate and loan balance to check an indicative scenario.

What the RBA said changed

The RBA expected housing conditions to ease after the change in the monetary policy outlook and cash-rate increases earlier in 2026. The Governor said the easing had been larger than the RBA anticipated in May.

The speech identified two broad contributors: recent housing-policy developments and softer housing-market sentiment. It did not attribute the result to one cause or provide a forecast for each capital city.

The price movement also varied by market:

• Established prices had eased modestly after a period of strong growth.
• Price declines were concentrated in Sydney and Melbourne.
• Prices in those two cities remained around their levels before interest rates began rising in February 2026.
• Prices in Adelaide, Brisbane, Perth and regional markets were still growing, but at a slower pace.

The RBA data are market-level indicators. They do not establish the value of a particular house, apartment or suburb.

Negative equity remained limited

Negative equity generally means the secured home-loan balance is greater than the current value of the property.

The RBA said its May 2026 estimates showed negative equity affecting less than 1% of borrowers. It also estimated that only a small share of that group faced severe repayment difficulty, defined in the speech as an estimated cash-flow shortfall after minimum loan repayments and essential living expenses.

That distinction matters. Negative equity is not the same as missing repayments, arrears or default. A borrower can continue meeting payments while the estimated property value is temporarily below the loan balance.

The estimate also has limits. It uses the RBA's Securitisation System and modelled current income and essential expenses. It is not a census of every mortgage and cannot identify an individual household's position.

A simple equity example

Assume a home has a current estimated value of $750,000 and the secured loan balance is $780,000.

• Indicative equity: $750,000 minus $780,000 = negative $30,000.
• Indicative LVR: $780,000 divided by $750,000 = 104%.

This does not mean the home will sell for exactly $750,000. Selling costs and a lender payout figure can also make the cash position different from this simple equity calculation.

Read how LVR is calculated in Australia, or use the Property Value Guide to understand why an online estimate is not a valuation.

What it may mean for borrowers

A lower property value can affect refinancing or equity-release options because a lender may calculate a higher LVR. It can also matter when selling if the expected proceeds would not cover the lender payout and selling costs.

The useful checks are specific rather than predictive:

1. Obtain the current loan balance or payout figure from the lender.
2. Use recent comparable sales or a current valuation rather than an old purchase price.
3. Calculate the LVR and allow separately for selling costs.
4. Model repayments using the actual loan rate in the Mortgage Repayment Calculator.
5. Contact the lender early if repayments are becoming difficult.

This page cannot determine whether a lender will refinance, approve an equity release or agree to a sale with a shortfall.

What this does not say about the cash rate

The Governor said monetary policy does not target housing prices. The RBA considers how housing-price changes affect household spending, investment and inflation, alongside the broader economy.

The cash-rate target was 4.35% when this article was checked, effective from 17 June 2026. The next Monetary Policy Board decision is scheduled for 2.30 pm AEST on 11 August 2026.

The housing comments do not reveal that decision in advance. See the August RBA meeting timetable and mortgage checks for the scheduled event without treating a forecast as fact.

What remains uncertain

Housing conditions can change after the reference period. City-wide measures can also hide large differences by suburb, property type and price range.

The RBA is due to publish updated forecasts in its August Statement on Monetary Policy on 11 August. This article should be reviewed after that release, particularly if the RBA updates its housing, household or financial-stability assessment.

Related calculators and guides

• Home Equity and LVR Calculator
• Mortgage Repayment Calculator
• Loan Comparison Calculator
• How to Calculate LVR in Australia
• August 2026 RBA Meeting Preview

Sources

• Reserve Bank of Australia: Monetary Policy in an Era of Shocks, Governor's speech delivered 28 July 2026 and checked 9 August 2026.
• Reserve Bank of Australia: Resilience of Australian Households and Businesses, March 2026 Financial Stability Review and checked 9 August 2026.
• Reserve Bank of Australia: Cash Rate Target Overview, current target and next decision time checked 9 August 2026.

General information disclaimer

This article provides general information and indicative examples only. It is not a valuation, property forecast, financial advice, credit advice, loan approval or recommendation. Property values, lender payout figures and refinance policies vary. Check current information and speak with a licensed professional where appropriate.

Last updated: 9 August 2026.