The Reserve Bank of Australia’s February decision to raise the cash rate by 0.25% has brought interest rates back into focus for buyers and homeowners nationwide.
The increase reflects ongoing inflationary pressure, with the RBA signalling it wants stronger confidence that inflation is heading back into its 2-3% target range. For the housing market, the immediate impact is higher borrowing costs, particularly for variable-rate mortgages. From a market perspective, rate rises tend to cool momentum rather than trigger sharp shifts. Buyer activity can slow, competition may ease in some areas, and price growth often becomes more measured. That does not automatically translate into falling prices, especially in markets where supply remains limited.
In Western Australia, local conditions still matter. Our population growth, constrained new housing supply, and continued demand for well-located homes support ongoing activity. What often changes during these periods is buyer behaviour, rather than buyer demand. Buyers focus more on value and take longer to make decisions.
Despite the recent rate rise and the possibility of further increases, strong price growth is expected to continue across Perth in 2026. REIWA is projecting a more than a 10% increase in the median house price, with some forecasts suggesting growth of between 12% and 16%. While higher interest rates affect borrowing capacity, Perth’s underlying supply, demand and economic drivers are expected to support property values that continue to outpace the cost of borrowing.
For buyers considering land, longer settlement periods and building planning often become part of the conversation when interest rates are higher. Investors are also affected. Higher interest costs influence purchasing decisions and holding costs, which may flow through to the rental market over time. At the same time, households with savings rather than debt can benefit from higher returns as deposit rates rise.
For first time buyers planning on entering the market, a rate rise is a prompt to be prepared rather than discouraged. Reviewing your borrowing capacity, allowing a buffer in your budget, and understanding your long term repayments can help you move forward with confidence.
If you would like help understanding how current interest rates may affect your plans, the Land4Sale team is always available to talk through your options.
