Following the Reserve Bank of Australia’s decision to cut the cash rate to 3.85%, Pallas Capital Chief Investment Officer Dan Gallen shares his perspective on what this signals for the Australian property market. From renewed buyer confidence to stronger borrowing power, Gallen outlines how the shift is likely to drive momentum across the sector.
“The RBA’s move to start cutting interest rates marks a real shift for the Australian real estate market, and we expect it to spark action across the board.
For renters who’ve been hoping to buy, this is encouraging news. Lower rates will make owning a home more affordable, and improved borrowing power means many will be in a better position to step into the market. We’ll likely see people getting their loan applications ready so they can act quickly when the right opportunity comes up.
For developers, this move could be a game-changer. With confidence starting to return among both owner-occupiers and investors, the pre-sales market is set to pick up again and we expect to see am uptick in valuations. That means projects that have been on hold could finally get moving—and we expect to see fresh activity across the development space.
“Commercial property owners will also welcome the shift. As cap rates ease and valuations begin to stabilise or even rise, the net income outlook will improve—bringing renewed confidence to the sector and more transactional activity, off a very low base.
Even for those who’ve done well in the high-rate environment, like income-focused retirees, this next phase offers opportunities. It’s a chance to think about where to reallocate capital in a way that’s smart, strategic, and still generates strong returns. At Pallas Capital, we’re optimistic about what’s ahead. As a private credit provider, we see strong tailwinds for our borrowers, investors and brokers.
“With developers re-engaging, investors with more headroom to spend, and new lending opportunities emerging, there’s every reason to feel confident about the next 12 months.”
Whether you’re a borrower or investor, our team can help you navigate the current market landscape.