Interest rates take back seat to affordability for home buyers

Affordability has overtaken interest rates as the greatest obstacle impacting Australians buying and selling homes.

Property tech company InfoTrack has found the cash rate, currently sitting at 3.85 per cent, did not weigh in as a major influence on more than 130,000 Australians’ decision to buy or sell in 2025.

About 45 per cent of those surveyed said it was not a consideration at all, while fewer than a third said interest rates had a significant impact on their decision.

Those who still weighed their decision based on interest rates said they influenced their budget and the type of property they could afford.

About five per cent held off buying or delayed a sale based on the cash rate.

The new figures mark a stark difference from 2024, when interest rates were a major influence for more than two-thirds of those surveyed.

“The finding challenges the idea that interest rates are stopping people from buying or selling,” InfoTrack’s head of property Australia Lee Bailie said.

“Instead, Australians are shifting their approach - they’re staying active in the market but they’re adapting to current conditions.”

Interest rates appear less of an obstacle for buying or selling a property this year, with affordability the reigning hurdle.

Almost a third of those surveyed said property prices were the biggest challenge in the housing market - a six per cent increase from 2024.

“The data is further evidence of the affordability crisis,” Mr Bailie said.

“More than half admitted property prices had a significant or major impact on their decision to buy or sell, while more than two-thirds of respondents said price determined where they bought.”

Some buyers and sellers were also influenced by market conditions, InfoTrack found, with 17 per cent struggling to find a property and more than half feeling pushed to act quickly due to price volatility amid pressure from competition.

Home prices across the nation continue to climb, with recent data from PropTrack revealing a 0.4 per cent rise in June and an overall 4.6 per cent jump across the year.

This pushed the median cost of a capital city home to $923,000, with the average property now $40,000 more expensive than earlier this year.

Adelaide, up 0.6 per cent, posted the strongest monthly rise, followed by Sydney and Hobart, which both recorded 0.5 per cent gains.

Perth, Melbourne, Brisbane and Canberra prices rose 0.3 per cent, while Darwin nudged 0.2 per cent higher.

While rates may no longer be a primary factor for people buying or selling homes, they still attract intense interest every six weeks when the Reserve Bank of Australia hands down its cash rate decisions.

Many economists have tipped next week’s decision to include cash rate relief by dropping to 3.6 per cent, which would shave about $90 off monthly repayments on a $600,000 mortgage.