How has the city responded to previous cycles of monetary tightening?
Late last year, we were expecting 2026 to deliver lower interest rates.
However, in a matter of months, the cash rate has increased from 3.60% to 4.10%, with the likes of Westpac tipping it to rise to 4.85% by mid-August.
The uncertainty of the Middle East conflict, disruption to global supply chains and the flow-on impacts at the bowser and supermarket checkout, have shifted the outlook.
Backyard BBQ conversations have taken on a negative tone.
However, while higher interest rates and rising living and business costs are difficult to manage, history has shown an unseen benefit for those who can withstand the headwinds.
In Brisbane, the end of a tightening cycle has historically marked either stabilisation or the start of price growth.
History has shown that once rates stabilise, upward pressure on property prices – driven by supply constraints and population growth – resumes.
A history of rate rises
Since 2000, Australia has endured five upward cash rate cycles.
| Cycle | Start | End | Start Rate | End Rate | Change | Moves |
| Early 2000s | Feb 2000 | Aug 2000 | 5.50% | 6.25% | +0.75% | 6 |
| Mini Cycle | May 2002 | Jun 2002 | 4.25% | 4.75% | +0.50% | 2 |
| Pre-GFC | May 2006 | Mar 2008 | 5.50% | 7.25% | +1.75% | 12 |
| Post-GFC | Oct 2009 | Nov 2010 | 3.00% | 4.75% | +1.75% | 7 |
| Post Covid-19 | May 2022 | Nov 2023 | 0.10% | 4.35% | +4.25% | 13 |
Let’s focus on the impacts of the two most influential cycles.
2006-08
The Reserve Bank of Australia tightened monetary policy over a 22-month period.
Locally, the state economy was firing on the back of the mining boom, while interstate investors dived into South East Queensland’s comparative affordability, seizing on apartment development activity and the appetite of lenders.
The cash rate movements – from 5.5% to 7.25% – ended in March 2008 and remained stable for six months.
Property growth followed in the wake of the cycle. In the 12 months to March 2009, Brisbane’s median house price increased 7% (from $450,000 to $480,000); units rose from $330,000 to $350,000.
(This result, however, should be viewed in context, as the latter half of the period was influenced by the Global Financial Crisis, which emerged six months later. The RBA slashed the cash rate from 7.25% to 3% between September 2008 and April 2009 in response to Lehman Brothers collapse and the subsequent global repercussions.
2022-23
The RBA cut the cash rate to an emergency level of 0.1% at its meeting in November 2020 in response to COVID-19. The cash rate remained at this historic low for 16 months.
Australia ended its lockdowns and re-opened borders in February 2022. The RBA began lifting interest rates from its emergency level on May 2022, ending its cycle at 4.35% in June 2023. It was the fastest tightening cycle in modern history.
When the RBA was satisfied it had hit the right level – and amidst public criticism– Brisbane’s median house price was approximately $760,000.
In the 12 months that followed, Brisbane recorded:
- An 13% increase to the median house price ($850,000);
- A 10% increase in the median unit price ($480,000 to $530,000).
What have we learned?
Interest rate hikes have not derailed the trajectory of the city’s real estate market.
Right now, people who are concerned about their debts with talk of further interest rate rises should be talking to their trusted advisers – their finance broker, accountant, and financial adviser.
If they can find a way to manage their way through higher interest rates to the other side, there is a chance that they could benefit from improved property values, as history has shown.
Supply is a major problem for South East Queensland. The State Government is pulling levers to ease delivery.
The costs of construction will, however, rise on the back of higher interest rates. Those added costs flow through to the end product.
And when the price of new stock increases, so too does established stock. Existing owners benefit from their units and houses creeping up in value. In real estate terms, the adage, “A rising tide lifts all boats,” is particularly pertinent for Brisbane.
Certainly, there are some developers who are choosing to liquidate holdings that aren’t currently generating cashflow. However, these developers have plans to return to the market, capitalising on the demand leading into the 2032 Brisbane Olympics and Paralympics.
What is Bromley doing ahead of this period?
With almost 50 years of experience helping clients navigate the residential and commercial property markets, we’ve seen our fair share of interest rate cycles.
In every instance, we have discussions with our clients – just as they do with their other trusted advisers – to understand their positions.
Contact your sales, leasing or asset management specialist at Bromley Real Estate today for an on the ground insight about what’s happening in your market.NB: This article is general in nature and does not consider someone’s individual circumstances. It is not financial advice. Bromley Real Estate does not hold a financial services license and cannot advise on real estate investment matters. We encourage readers to seek professional advice from a qualified financial adviser and accountant.