Sliding housing prices gave the Reserve Bank a surprise helping hand

August 3, 2026 — 12:01am

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It’s the helping hand that surprised even the Reserve Bank.

The bank always knew that its three rate hikes - in February, March and May - would slow the property market.

While governor Michele Bullock will say up hill and down dale that the bank does not target asset prices, the RBA’s interest rate rises were all aimed at taking steam out of the economy. And, as the Reserve Bank knows, climbing house prices make people feel wealthier and happier, leaving them more likely to open their digital wallets.

The so-called wealth effect also works in reverse. Falling property prices are more likely than not to make consumers a little wary when it comes to spending a dollar, adding to any deflationary pressures in the economy.

Property prices, particularly those in Sydney where residents don’t get out of bed unless they’ve got a........

© The Age