The two numbers this month point in different directions. Inflation has given the Reserve Bank a reason to wait. Property values have picked up speed on the way down. A lender has to plan for both.
| Measure | Latest | Detail |
|---|---|---|
| Cash rate | 4.35% | Unchanged since May |
| Headline inflation | 3.8% | Year to June, from 4.0% in May |
| Trimmed mean inflation | 3.6% | Year to June, unchanged; 0.8% for the June quarter |
| Unemployment | 4.4% | June |
| National home values | -0.7% | July, the largest monthly fall since December 2022 |
| Sydney home values | -1.4% | July; about 5.3% below the January peak |
| Next Reserve Bank decision | 11 August | A hold is widely expected |
Inflation.
Headline inflation fell to 3.8 per cent in the year to June, below the 4.0 per cent the market had expected. Trimmed mean inflation held at 3.6 per cent, slightly under the Reserve Bank’s own forecast of 3.7 per cent. Over the June quarter the trimmed mean rose 0.8 per cent, which annualises to a little over 3 per cent, still above the top of the 2 to 3 per cent target band.
The result was soft enough to take an August increase off the table for most forecasters. All four major banks now expect a hold on 11 August, and cash rate futures price no change. It was not soft enough to bring forward a cut: the major banks that forecast one place it in 2027.
Jobs.
Unemployment was 4.4 per cent in June, and underemployment rose 0.2 percentage points to 6.5 per cent. The labour market is loosening gradually rather than abruptly. For borrowers, a job market that softens slowly tends to show up first in fewer hours and smaller pay rises, and only later in arrears.
Where values sit.
Cotality’s index fell 0.7 per cent nationally in July, accelerating from June’s 0.4 per cent and the largest monthly fall since December 2022. Sydney fell 1.4 per cent and is about 5.3 per cent below its January peak. Investor demand for established dwellings has softened since the Budget.
A note on peaks. As the index is revised, the month in which Sydney peaked has moved, from November 2025 in earlier releases to January 2026 now. The size of the fall from peak depends on which vintage of the data is used, and we quote the vintage as published.
What this means for lending
Plan the loan for the slower sale.
Every recovery assumption in property lending rests on how long a sale takes. When values fall faster and fewer investors bid, campaigns run longer and vendors discount more. A loan that only works if the security sells inside a normal campaign has a hidden assumption in it.
For construction and development loans the test is the finished value on the day the project completes, measured against current comparable sales, and the cost to complete measured against current builder pricing. Progress percentages measure how much has been built, which is a different question from what the finished project will sell for.
Sources.
- Australian Bureau of Statistics, Consumer Price Index, Australia, June 2026 (released 30 July 2026): monthly and June quarter measures.
- Australian Bureau of Statistics, Labour Force, Australia, June 2026 (released 23 July 2026).
- Cotality, Home Value Index, August 2026 release (data to 31 July 2026): national and Sydney monthly changes, change from peak, as first published.
- Reserve Bank of Australia, Statement by the Monetary Policy Board, 16 June 2026; market pricing and major bank forecasts as reported in early August 2026.
This commentary is general information only, prepared by Oxford Capital Pty Ltd (ACN 700 065 872). Oxford Capital Pty Ltd is the investment manager of the fund and a corporate authorised representative (CAR No. 1323556) of Non Correlated Advisors Pty Ltd ACN 158 314 982, AFSL 430126. It does not hold an Australian Financial Services Licence of its own. The trustee of the fund, and the issuer of units in it, is Non Correlated Capital Pty Ltd ABN 99 143 882 562, AFSL 499882. It is not financial product advice, does not take account of anyone’s objectives, financial situation or needs, and is not an offer or invitation to acquire any financial product. It reflects the author’s views at the date of publication, which may change. Figures are drawn from the sources listed and are subject to revision by the issuing agency. Nothing here is a forecast of the performance of any Oxford Capital fund.