The Buyer Read: Midweek Market Update

For the first time in three months, the RBA's language shifted.

The May decision delivered another 25 basis points, taking the cash rate to 4.35%.

That's three hikes in 2026 alone.

But the statement that followed included something buyers should pay attention to: the Board now believes rates are "high enough to give scope to pause and monitor economic developments."

That's not a promise. It's not a pivot. But it is a signal that the hiking cycle may be close to its ceiling.

For buyers who have been waiting for an inflection point, this is worth understanding carefully.

At the same time, national auction clearance rates for the week of 23 May were 52.2%. That is well below the kind of result that suggests a competitive market. The combination - a potential rate pause and softening auction conditions - is worth examining closely.

What mattered this week

The RBA hiked, then signalled a potential stop.

The May decision was expected. What wasn't assumed was the language in the accompanying statement. Eight of nine Board members voted to hike to 4.35%. But the Board also noted that rates are now "high enough to give scope to pause." That phrasing is deliberate. The RBA doesn't use language carelessly. CBA and most major bank economists now expect rates to remain on hold for the rest of 2026. Westpac remains the outlier, forecasting two more hikes in June and August.

Auction clearances hit 52.2% nationally.

The week of 23 May recorded a national clearance rate of 52.2% - well below the 65%+ typically seen in a competitive market. Sydney and Melbourne, which have been softening for months, are where the weakness is most pronounced. Listings in those two cities have crept above long-term averages. The rest of the country is still below average stock levels, with national listings sitting 9.6% below the five-year average.

Discounting is quietly increasing.

The median discounting rate across the combined capitals has moved from 2.9% to 3.1%. That's a small change that represents a real shift in negotiating conditions. Twelve months ago, properties were selling at or above their asking price. That is less common now.

The Iran conflict keeps inflation sticky.

Brent crude oil remains elevated following the disruption in the Strait of Hormuz, which restricted roughly 20% of global oil supply. Australian CPI for the March quarter came in at 4.6% - still well above the RBA's 2–3% target. The energy shock is one of the main reasons the RBA couldn't hold off on the May hike, and it's the key variable that could keep rates elevated if it persists.

What it means for property buyers

Borrowing capacity has fallen since January. Based on current figures, a single-income buyer at average wages has lost around $36,000 in purchasing power across the three hikes. That's real, and it's worth stress-testing your pre-approval before acting.

But the environment has also shifted in another way. A 52% clearance rate means more properties are passing in.

That means sellers are adjusting expectations - or at least, more of them are. Discounting rates are rising. Selling times are extending.

Genuinely prepared buyers - finance sorted, suburbs researched, criteria clear - are entering the best negotiating conditions in two years.

If the RBA pauses in June, as most economists now expect, consumer confidence will likely lift modestly. That's a double-edged signal: better conditions today, but more competition in a few months if sentiment turns.

The structural picture hasn't changed: supply is still tight nationally, with listings 9.6% below the five-year average. Any confidence recovery would be absorbed by demand before prices are likely to fall meaningfully.

What buyers often get wrong

Assuming a rate pause solves the affordability problem.

A pause in hikes means borrowing costs stop rising - not that they fall. The cash rate of 4.35% is still high by recent standards. Repayment pressures on existing mortgages don't ease when the RBA pauses. They ease when it cuts.

The other mistake is interpreting weak clearance rates as proof that property is about to be cheap. A 52% clearance rate indicates lower competition in an auction setting. It doesn't mean negotiation leverage is unlimited, or that quality properties in tightly held corridors are suddenly being heavily discounted. In markets with tight supply, vendors often pull listings or adjust the method of sale before accepting a significant price cut.

If you're looking in a market with genuinely constrained supply - like many Illawarra suburbs - the clearance rate tells you less than it might in Sydney or Melbourne, where more stock is moving.

What I'd pay attention to next

The June RBA meeting is the clearest near-term signal. A hold confirms the peak and is likely to lift sentiment. Another hike would extend the current pressure and delay any recovery in buyer confidence.

Watch whether clearance rates stabilise or continue to fall. A move below 50% nationally would represent genuine weakness in buyer activity.

The divergence between Westpac and CBA on rate forecasts is worth monitoring. If oil prices stabilise or fall, the CBA view (hold) becomes more likely. If the Middle East conflict escalates further, Westpac's two-hike view gains credibility.

For Illawarra-focused buyers, softness in the Sydney market has historically supported demand for relocations south of Sydney.

ome of that movement is already visible. If Sydney continues to soften while the Illawarra holds, the case for moving sooner rather than later strengthens.

Our view

The RBA's own language now suggests the hiking cycle may be at or near its end. Combined with 52% clearance rates and increasing discounting, this is the most buyer-favourable set of conditions in at least 18 months.

That does not mean waiting is the wrong call. It means being unprepared is now a bigger risk than it was six months ago.

Buyers who have done the groundwork - finance, suburbs, criteria - are well-positioned to take advantage of the current negotiating environment before a rate pause potentially tightens competition again.

Final takeaway

Rate pause or not, property decisions should be grounded in your specific situation - your borrowing capacity, your target area, and whether the property you're looking at makes sense at the price being asked.

The macro picture is shifting in a direction that may benefit prepared buyers. The question is whether you're actually prepared.

If you want to talk through what the current conditions mean for your search in the Illawarra or beyond, we're here to help.

This article is general information only. It does not constitute financial, investment, or property advice and does not take into account your personal objectives, financial situation, or needs. Property markets involve risk. Before making any property decision, seek independent professional advice.