Is Australian Property Still Worth It With Rates Stuck at 4.35%?

Every time the Reserve Bank holds its cash rate, the same argument breaks out online: property is dead now that a mortgage costs as much as the rent it replaces, or property has always come back and always will. Both sides are trading a feeling for a fact. At Total Money Management, we would rather look at what a 4.35% cash rate actually does to the numbers, because that is the only part of the debate you can measure.

What Has Actually Changed Since Rates Started Moving Again?

Australian borrowers had a strange two years. The RBA cut the cash rate three times through 2025, then reversed and delivered three consecutive hikes in the first half of 2026, taking it back to 4.35%. The board held at its June meeting, and the next decision lands on August 11.

Sources: Reserve Bank of Australia, Finder home loan rate tracker, July 2026.

What Does a 4.35% Cash Rate Cost a Mortgage Holder?

A cash rate is not a mortgage rate. Lenders typically price variable home loans two to three percentage points above the cash rate to cover funding costs and margin, which is why the average variable rate now sits close to 6.9% even though the cash rate is 4.35%. That gap is the real cost of borrowing, and it is the number that decides whether a property purchase is comfortable or a stretch.

• Serviceability has tightened materially. Roy Morgan research puts mortgage stress at roughly 26.6% of borrowers, well above the long-run norm.
• Borrowing capacity has shrunk. APRA's serviceability buffer tests new applications at the contract rate plus 3%, so a 6.9% loan is assessed as if it were closer to 9.9%.
• Deposit timelines have stretched. Housing affordability research puts the average time to save a 20% deposit at around 11 years nationally.

"The cash rate is the headline. The variable rate you actually pay is the story."

Is Rental Income Keeping Up With Repayments?

This is the part most debates skip. If you already own an investment property, or you are weighing one against shares, the rental yield relative to your borrowing cost is the number that matters, not the price you paid.

• National rents rose 5.9% over the year to June 2026, the strongest annual pace since September 2024.
• Gross rental yields have edged up to around 3.5% to 3.7% nationally as rents outpace slowing capital growth, though yields are still below the average variable mortgage rate.
• Regional markets outperform capitals on yield, averaging around 4.2% against roughly 3.5% across the combined capitals.

A yield below your borrowing cost is not automatically a bad investment. It has been the normal state of Australian residential property for most of the last two decades, and the return has historically come from capital growth rather than income. It does mean the holding cost, the gap between rent received and interest paid, is real and needs to be funded from somewhere else in your budget.

Why Does One City Look Fine While Another Doesn't?

National averages hide the real story. Over the past year, Perth dwelling values rose close to 23.9% while Melbourne fell around 0.9%, a gap of roughly 25 percentage points between the best and worst performing capitals. Sydney and Melbourne have both been easing from late 2025 peaks, while Perth, Adelaide and Darwin have kept climbing on tighter supply and stronger population growth.

This is why a single "is property worth it" answer is close to meaningless. The question that actually has a data-driven answer is narrower: is this property, at this yield, funded at this borrowing cost, worth it. That is a spreadsheet question, not a headline question.

What Does TMM's Framework Say About Timing a Purchase Like This?

We covered this properly in our stocks versus property guide, and the same principles apply here. Recency bias pushes people to extrapolate whatever has just happened, assuming a rate hold means cuts are coming, or that a soft month of price data means the cycle has turned. Path dependence matters more than most buyers admit: the order in which rates move and prices adjust changes the outcome even when the destination looks the same.

If you want the deeper version of how to read where you sit in a cycle rather than reacting to the latest headline, our guide to reading the market cycle walks through the framework in full.

"A rate hold is not a signal. It is one data point in a series you have not seen the end of."

Choose Property Now, or Choose to Wait

Numbers Over Narrative

Property is not dead at 4.35%, and it is not automatically a good time to buy either. What changed is the cost of the debt underneath it, and that cost is measurable: roughly 6.9% on an average variable loan, tested at close to 9.9% under the serviceability buffer, against a rental yield sitting closer to 3.5%. Whether that gap makes sense for you depends on your own numbers, not on which side of the debate is louder this week. That is the whole point of treating this as arithmetic rather than an argument.

Frequently Asked Questions

Is now a good time to buy property in Australia?
There is no single answer that applies nationally. Perth, Adelaide and Darwin have kept growing on tight supply, while Sydney and Melbourne have eased from late 2025 peaks. The better question is whether your own serviceability and time horizon support a purchase at today's borrowing cost, not whether "the market" is up or down this month.

Why is my mortgage rate so much higher than the RBA cash rate?
Lenders price variable loans two to three percentage points above the cash rate to cover funding costs, risk and margin. A 4.35% cash rate translating to a mortgage rate near 6.9% is normal, not a sign something has gone wrong.

Is rental yield supposed to be lower than my mortgage rate?
For most of the last two decades, yes. Australian residential property has typically returned more through capital growth than rental income, which is why the gap between yield and borrowing cost, the holding cost, has to be funded elsewhere in your budget.

Should I choose shares or property?
That is the wrong first question. Our stocks versus property guide breaks down how to compare the two on cost, return and volatility rather than preference.

For the RBA's own explanation of how cash rate decisions are made, see the Reserve Bank of Australia's monetary policy overview.