Breaking News: The RBA Has Cut Rates Again

In March 2025, after the Reserve Bank of Australia’s first interest rate cut in February, I predicted that further reductions would come around June or July. In fact, I highlighted this acceleration just two weeks ago in my latest article. But the RBA surprised us all—the second cut arrived much earlier than expected. 

Earlier-Than-Expected Rate Cuts

This is huge.  A 0.25% rate cut can boost your borrowing capacity by around $12,000, which can be the difference between settling for less or securing your ideal property.

It marks the first back-to-back easing cycle in years. The cash rate may drop further to 3.35% by year-end, depending on inflation and global conditions.

Why does this matter?

Because interest rate cuts make borrowing cheaper — which directly fuels buying activity. And as history shows, once the market realizes rates are heading downward, prices start climbing upward.

Bank Moves Confirm the Trend — Fixed Rates Are Already Falling

In anticipation of the RBA’s cuts, Australia’s major banks began slashing fixed-rate mortgage products months ago. Now with the official cut confirmed, banks like Macquarie, CBA, NAB, and ANZ have started passing on the full reduction to borrowers. 

This provides immediate relief for mortgage holders, with average savings of around $80 per month on a $500,000 loan after two cuts.

Buyers are re-entering the market aggressively.

Developers are pushing inventory quickly — especially land estates in Perth, where titled land starts from just $331,000.

Yes, you read that right. Titled. Ready to build. From $331k.

Compare that to Singapore, where a mere BTO flat can cost over SGD $600,000, or where a shoebox condo unit can run above SGD $1 million.

See the contrast? And it gets better.

Melbourne Demands your Attention Right Now

Despite a recent dip, the city is experiencing a severe shortage of housing supply, especially in one-bedroom units, which is driving prices back up.  Vacancy rates are at a decade low (1.8% in April 2025), and new home completions are at a 10-year low, with dwelling approvals 15% below the 10-year average. This undersupply is most acute in affordable housing segments. 

Population Growth

Victoria’s population growth is robust, with nearly 184,000 new residents in the year to March 2024, 83% of which is due to overseas migration, fueling demand for housing.

Auction Clearance Rates

Auction clearance rates are strong, with a recent rate of 68% (week ending May 17, 2025), up from 59% a year ago. Preliminary rates have even reached above 70% in some recent weeks.

Melbourne Auction Clearance Rate vs Price Growth

Buyer Confidence

Buyer confidence is returning.  According to NAB’s Q1 2025 Property Survey, 44% of buyers believe Victoria is at the start of a recovery, supporting your statement about returning buyer confidence.

Melbourne continues to attract both local and international buyers, including Singaporeans, due to its affordability, strong rental demand, and capital growth potential. Rental yields in some suburbs are competitive, and the favorable exchange rate further incentivizes foreign investment.

Rental Yields and Vacancy

Gross rental yields have improved to 3.7% (up from 3.5% last year), and rents are rising faster than wages and inflation. The rental market is under significant pressure due to high demand and low vacancy.

According to CoreLogic, Melbourne is quietly regaining its edge.

Despite all the headlines about slowing markets, the unit rental sector in Melbourne just hit a gross yield of 4.8% — that’s a 37-basis point jump. In the same report, CoreLogic revealed that the national gross rental yield has climbed to a two-year high of 3.73%, while regional Australia is still holding strong at 4.41%.

If you're wondering whether Melbourne still makes sense as an investment, the numbers say yes.