Interest rates have just dropped, and that means it’s time to take a close look at how this movement affects property prices. Most people assume there’s a simple relationship—when interest rates go up, property prices go down, and vice versa. But the data tells a different story.

To understand this, let’s examine the past ten years of interest rate cycles and what happened to Australian property prices during each period.

The Three Interest Rate Cycles in the Last Decade

Over the past ten years, Australia has experienced three distinct interest rate cycles. Each of these cycles gives us a clearer picture of how property prices respond to interest rate changes.

Cycle 1: May 2015 – August 2016

  • Interest rates fell from 2% to 1.5%.
  • Rates then remained on hold for three years.
  • Property prices increased by 15.44%.

Key insight: When they dropped, property prices rose.

Cycle 2: June 2019 – May 2022

  • Interest rates dropped six more times, from 1.5% to just 0.1%.
  • Property prices surged, increasing by 37.74%.

Key insight: Again, when they fell, property prices skyrocketed.

Cycle 3: May 2022 – November 2023

  • Interest rates rose 13 times, reaching 4.35%.
  • Rates remained on hold from November 2023 to February 2025.
  • Despite the sharp rise in rates, property prices still increased by 7.02%.

Key insight: Even when they went up, property prices didn’t crash. They softened initially but then recovered and continued to grow.

What This Means for Property Buyers and Investors

1. Movements Happen in Clusters

Interest rates never change just once. They move in clusters, meaning if rates have just dropped, more cuts are likely to follow. This pattern has repeated itself in every cycle over the past decade.

2. When Interest Rates Drop, Property Prices Rise

The data is clear—each time they have dropped, property prices have surged. With the first rate cut now in place, we can expect property prices to climb again.

3. When Interest Rates Rise, Property Prices Also Rise (Over Time)

This is the surprising one. While most people assume higher rates cause property prices to crash, the reality is different. Prices may soften in the short term, but as soon as rates hold steady for a while, property values bounce back and continue growing.

The Bottom Line

Interest rates and property prices are connected, but not in the way most people think. The expected trend—rates down, prices up—is playing out again. But the unexpected insight is that even when rates rise, property prices still go up over time.

With the first rate cut in place and more likely to follow, history suggests we’re entering another period of property price growth. The opportunity is here—those who act now will benefit the most.