As global tensions rise, central banks are forced into difficult positions. For the Reserve Bank of Australia, the situation becomes increasingly complex.

If the conflict in Iran pushes oil prices higher, inflation could reaccelerate—just as policymakers were beginning to see signs of cooling. This complicates the outlook for interest rates.

For borrowers, this matters deeply.

Many Australians have been holding onto the hope of rate cuts. Lower rates would improve borrowing capacity and potentially reignite buyer demand. But if inflation remains stubborn due to global shocks, the RBA may delay cuts—or worse, consider tightening again.



This creates a psychological barrier in the market. Buyers begin to adopt a “wait and see” approach. Sellers, in turn, may hold off listing, anticipating better conditions ahead. The result? Reduced transaction volumes.

But here’s the other side of the story.

Australia’s economy remains relatively resilient compared to many global peers. Strong population growth, limited housing supply, and a robust labour market continue to underpin property fundamentals.

If interest rates stabilise—even at higher levels—certainty alone can bring confidence back into the market. Buyers don’t necessarily need low rates; they need predictable ones.

Additionally, some segments of the market—particularly higher-income buyers and investors—are less sensitive to rate changes. These groups may step in during periods of uncertainty, capitalising on reduced competition.



So while the pressure on rates is real, it’s not uniformly negative. It reshapes the market, rather than halting it.