Q3 2025 Mid-Point Check: Are Markets Cooling or Consolidating?

Halfway through the quarter, the market is sending mixed signals. Growth has eased from its mid-year peak, and the RBA wrong-footed everyone with a surprise hold in July. But prices are still rising, and another cut looks imminent. The question is whether this is a market cooling, or simply pausing for breath.

What the surprise hold changed

The RBA held the cash rate at 3.85% in July, defying near-universal expectations of a cut. Markets had priced the move at well over 90%.

The pause sparked debate, not panic. The Board wanted firmer proof that inflation was heading sustainably to target before easing again.

It did dent momentum slightly. Some buyers and sellers paused too, waiting for the next clear signal from the Bank.

But the easing bias remains. Economists broadly expect the cut that did not come in July to land in August instead.

The number: Markets had priced a July rate cut at well over 90% before the RBA held at 3.85%, then quickly shifted their expectations to an August move, per Reuters polling. The cut was delayed, not cancelled, and the market is positioning for it.

Cooling or consolidating?

The data points to consolidation, not a downturn. Growth has slowed from its peak, but it has not reversed.

National values kept rising through the first half of the year, and the pace, while easing, remained positive into the middle of the quarter.

The recovery's leaders are simply catching their breath. Sydney and Melbourne, having rebounded strongly, are growing more steadily rather than stalling.

Supply remains the anchor. Listings have stayed below long-run averages, which keeps a floor under prices even as momentum moderates.

What investors should watch into spring

The next RBA decision is the immediate focus. A widely expected August cut would reinforce the recovery and lift sentiment into spring.

Spring listings are the next test. As more stock comes to market, the question is whether buyer demand keeps pace with rising supply.

Auction clearance rates will tell the story early. Firm clearances through spring would confirm demand remains strong despite more choice.

Rental conditions stay tight in the background. Low vacancies continue to support yields, even as rental growth itself moderates.

What investors should ask

Is the market about to fall? There is little sign of it. Growth has eased from its peak, but prices are still rising and supply is tight. This reads as consolidation, not the start of a decline.

Why did the RBA surprise everyone in July? The Board chose caution, wanting clearer evidence that inflation was sustainably easing before cutting again. Most economists expect it to ease at the August meeting instead.

Should I wait for spring to buy? Spring brings more choice but also more competition, especially if a rate cut lands first. More stock can help buyers, but waiting is not guaranteed to improve your position.

Does slower growth mean better value? Sometimes. A consolidating market can offer steadier prices and less competition than a fast-rising one, which can suit patient buyers focused on fundamentals.

The bottom line

At the midpoint of Q3, the market looks to be consolidating rather than cooling, with growth easing from its peak but staying positive and supply still tight. The RBA's surprise July hold delayed the next cut without derailing the recovery, and an August move would likely steady sentiment heading into spring. For investors, this is a moment to watch the rate decision, spring listings, and auction clearances closely, because they will set the tone for the rest of the year. Track how these shifts flow through to your specific markets in real time with Clear Yield.