👉 Background: The Reserve Bank of Australia meets on the first Tuesday of every month. Yesterday, they met again and yep, you guessed it, they raised the cash rate by 0.25%.

👉 What happened: The cash rate is now sitting at 4.10%, which means the 6 million Australians making mortgage repayments are under even more stress.

👉 What else: But here's the strange thing: after a drop in average house prices over the past 9 months, it seems to have bounced again. Last month, Australian property prices jumped up by 1.2%.

What's the key learning?

💡Generally, an increase in the cash rate leads to a decrease in home property values. Make sense right?

• As mortgage repayments increase, banks tighten their lending amounts
• With smaller lending amounts, prospective buyers are priced out of properties

💡But thinking about the property market with just two variables (ie cash rate, and property prices) is  little bit simplistic.

💡 There are a whole range of factors that can influence property prices - outside of just the cash rate.

• Right now, Australia's having a surge of demand for housing. Post-Covid migration is expected to hit 400,000 this financial year - which is 60% higher than pre-pandemic.
• And supply of housing is currently real short.. In fact, new apartment approvals fell to their lowest level in more than 11 years in April.

So the RBA can do as much as humanly possible to slow down the property market, inflation and overall spending, but they really only have one lever at their disposal.