Buy Now or Wait? How New Home Buyers are Reacting to the Cash Rate

Buyers have the appetite to build new houses, but public attention on the cash rate is having a heavy impact on their decision-making.

According to some industry insiders, that impact is bigger than it perhaps should be. They see buyers in the market for new detached homes reacting much like home hunters in the existing market, even though some of the fundamentals of those transactions are quite different. 

Detached home sales have been feeling the heat of interest rate fluctuations. Image: Getty

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“If you look at all economic reports between now and the end of next year, there’s likely going to be at least three cash rate decreases of 0.25 basis points,” noted Drew Glascott, the general manager of sales for Victoria at national homebuilder Metricon.  

He believes home buyers in the new detached housing market should be factoring this in, now. 

“When you buy a block of land, let’s say it’s titled in six months’ time, you’re not going to settle for six- or seven-months’ time. Then your house is going to start construction in say, nine months’ time. Then add on another six months for construction. So, for a buyer right now, you’ll be looking at late next year in terms of the interest rate you’ll be paying for a completed house and land package,” he said. 

But, Mr Glascott acknowledged, no one has a crystal ball and it’s understandable that buyers would prefer the certainty of the cash rate being locked in. 

“They’re human beings, people are nervous. They want to make sure that the predictions turn out to be true before they move forward.” 

A rollercoaster of RBA calls

The Reserve Bank of Australia’s shock decision in July to hold the cash rate steady at 3.85% – when all major banks and economists were predicting a cut based on promising monthly inflation figures – has not buoyed confidence among new home buyers. 

According to James Vella, group sales manager for the Masterton Group, the effect was almost instantaneous. 

“When the RBA stalled in July after all the media predictions of another interest rate cut, that hold had an immediate effect on the market.”

It was also something of a return to a recent state of affairs. The slowdown in sales in July was only so noticeable because of a recent upswing off the back of cuts in February and May.

“At the start of the year, the rate cut that happened back in February definitely produced confidence in buyers and created more urgency. And that flowed again in May when we had that second cut, which led to even more positivity within the marketplace,” Mr Vella said. 

Research from the Housing Industry Association (HIA) backs this observation, reporting that sales of new detached homes increased by 18.8% in the three months to June 2025 compared to the previous three months, representing a three-year high. 

But that figure is expected to drop due to July’s cash rate hold – though industry figures hope not for long. 

Quarterly inflation data released by the Australian Bureau of Statistics at the end of July, which showed that trimmed mean inflation was at its lowest since December 2021, appears to make an August cut all but inevitable. All major banks are once again unanimous in the opinion that the next meeting will bring a cut. 

Major builders are hoping that this projection will start to bring positivity back to the market even before the call, and that buyers will feel more confident in subsequent cuts into next year. 

According to Mr Glascott, those who do feel comfortable enough to act now will be rewarded with a good deal, particularly in his market of Victoria.

“The offers that we see on homes at the moment are probably some of the best offers that I’ve seen up in the industry for over 20 years. Builders are really putting everything out there in terms of promotion and discounts.”  

“In terms of an overall house and land package, you will not get a better offer than today’s market,” Mr Glascott said. 

A tale of two buyer cohorts

For home hunters in the market for a new apartment, however, it’s something of a different story. Several factors mean that sales have not been nearly so swayed by the RBA’s recent decisions. 

According to Samuel Gardner, director at Gardner Vaughan Group, buyers in multi-dwelling constructions are not nearly as cash-rate reactive, nor have they been for some time. 

“We have found that price and financial vitality has dropped down the list of drivers when it comes to buying an apartment off the plan,” he said. 

One big factor behind this variation is the generational difference among buyers. In Mr Gardner’s market of south-east Queensland in particular, downsizers make up a significant proportion of off-the-plan apartment buyers. This community is far less dependent on financing when making property purchase decisions. 

And it’s hardly just a Queensland thing. Recent pre-sales for Perle, a 173-residence construction going up in the heart of Penrith, showed the building was attracting a high level of downsizers looking for low-maintenance homes in a market largely dominated by older, standalone houses.  

Central Element, which primarily develops luxury apartments in inner-Sydney and the city’s north, also recently noted that 90% of their buyers on the Lower North Shore were downsizers. 

But beyond attracting the retiree cohort, there’s another reason that off-the-plan apartments seem to be less interest rate reactive, and that’s due to how they function as an alternative to standalone homes.

Mr Glascott noted that the apartment market also captures some of the would-be buyers in the detached house market.

While many who are up against serviceability buffers might wait for conditions to improve, there are still others who decide to change their expectations and shift from building a new home to buying a new apartment. 

Off-the-plan apartment buyers are proving less cash-rate reactive. Image: Getty

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According to Mr Gardner, the location in which higher-density housing is being built is also playing a part. Cropping up in existing, bustling communities, apartments have a big lifestyle draw, and that has particularly been attracting the lifestyle-oriented cohort. 

“We’ve seen that the potential of a certain lifestyle and the potential of securing a property at a certain price before it goes up is outweighing concerns about the cash rate,” he said. 

In fact, among apartment buyers, the understanding that the earlier they buy, the better price they’ll get, can be a big motivating factor. Off-the-plan apartments will generally be priced most competitively at the start of a campaign. This is because developers often need to hit certain pre-sales targets to secure financing for the build, so the best prices they offer are on the earliest sales.

In addition, prices will be aligned to the market over the course of the build. When the market rises, those off-the-plan homes do, too. It means that a buyer can get a better price on the same product if they put down their deposit at the start of a sales campaign.

But here too, a desire for certainty can cause many buyers to pause on pulling the trigger. It can be hard to buy a property as much as two years before it will be habitable. As a build progresses, buyers feel more assured of the product that is on offer as well as the knowledge of whether this purchase will suit their plans and lifestyle.

Ultimately, buyers of new detached homes and off-the-plan apartments might be motivated by different reasons, but they are both currently facing the same catch-22: buy now (if you can) or wait for certainty – albeit at potentially higher prices.

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