Rising unemployment could spare property buyers another RBA November rate hike

Australia's weakening jobs market could be enough to convince the Reserve Bank to leave interest rates unchanged in November, offering some much-needed stability to a property market that has spent much of 2026 adjusting to higher borrowing costs and changes to investor taxation.

The latest Australian Bureau of Statistics figures show the unemployment rate reached 4.7 per cent in September, its highest level since the pandemic, while the number of Australians in employment fell by 39,300.

August's unemployment rate was also revised higher to 4.7 per cent, suggesting the labour market has been softening faster than the Reserve Bank anticipated.

The figures arrive at an important time for the RBA, which has been trying to contain persistent inflation without pushing the economy into a more significant slowdown.

For property buyers, the prospect of another rate hike has been hanging over the market since the RBA increased the cash rate to 4.6 per cent in September.

It doesn't mean interest rates are about to fall. Inflation remains above the RBA's two to three per cent target, and some economists still expect further tightening.

But the prospect of rates remaining unchanged through November would be a welcome development for buyers who have been reluctant to make significant financial commitments while borrowing costs continue to rise.

For the new apartment market, that certainty could be particularly important.

Unlike buyers of established homes, off-the-plan purchasers are often committing to a property that won't settle for another two or three years.

While they generally only need a deposit to secure an apartment, their eventual borrowing capacity and mortgage repayments will depend on lending conditions closer to completion.

That has made interest rate expectations an increasingly important part of the purchasing decision.

A pause in November wouldn't necessarily trigger an immediate increase in sales, but it could help restore confidence among buyers who have remained interested in purchasing yet have delayed making a commitment.

There is also a growing distinction between the established and new property markets following the federal government's changes to negative gearing.

Under the reforms announced in the May budget, investors purchasing established residential property after May 12 will no longer be able to offset rental losses against their salary or other non-property income from July 2027.

Eligible newly built properties, including off-the-plan apartments, are exempt, with existing negative gearing arrangements continuing to apply.

That distinction could become increasingly important as investors reassess where to put their money.

For investors considering an established apartment or house, the combination of higher borrowing costs and reduced tax benefits has made the numbers less attractive.

New apartments, meanwhile, retain a tax advantage that could encourage more investment into developments that add to housing supply.

There are still challenges. Construction costs, development feasibility and access to finance continue to influence which projects reach the market, while buyers remain conscious of the risks associated with purchasing years ahead of completion.

And a weakening employment market is hardly an unequivocal positive for housing. Job security remains central to buyer confidence, particularly among first home buyers and younger purchasers.

However, the prospect of the RBA pausing in November, combined with the preferential treatment of new housing under the negative gearing reforms, could provide some support for the off-the-plan market heading into 2027.

The next major test will be the September-quarter inflation figures, which could ultimately determine whether the RBA believes it has done enough with its four rate hikes so far in 2026.