Let's talk about the elephant in the room.
Interest rates. They're on everyone's mind—buyers wondering if they can still afford to enter the market, sellers worried about declining demand, and investors recalculating their numbers.
After 25+ years helping over 500 families buy and sell across St George, I've seen interest rate cycles come and go. And here's what I know for certain: understanding how rates affect our local market gives you a significant advantage.
This isn't theoretical analysis—it's based on what I'm seeing every day at open homes, auctions, and settlement tables across Rockdale, Brighton-Le-Sands, Sans Souci, and every St George suburb in between.
Current Interest Rate Environment (February 2026)
The Numbers You Need to Know
| Rate Type | Current Range |
|---|---|
| RBA Cash Rate | 4.35% |
| Variable Home Loans | 6.0% - 6.8% |
| Fixed Rates (1-3 years) | 5.8% - 6.5% |
| Investment Loans | 6.2% - 7.0% |
| First Home Buyer Rates | 5.9% - 6.6% |
Context matters: Yes, these rates feel high compared to the 2-3% we saw during COVID. But historically? They're moderate. I remember the early 1990s when rates hit 17%. Today's rates, while higher than recent years, are far from crisis levels.
How Interest Rates Directly Impact Property Prices
The Borrowing Capacity Effect
This is the most immediate impact. Higher rates mean you can borrow less money. Here's what that looks like for a typical St George buyer:
Borrowing Capacity on $120,000 Household Income:
| Interest Rate | Maximum Borrowing |
|---|---|
| 3.0% | ~$850,000 |
| 4.0% | ~$780,000 |
| 5.0% | ~$720,000 |
| 6.0% | ~$670,000 |
| 7.0% | ~$620,000 |
Key insight: A 3% rate increase translates to roughly $200,000 less borrowing capacity. That's the difference between a house and a unit, or Brighton-Le-Sands and Banksia.
🧮 Check Your Borrowing Capacity
Find out exactly how much you could borrow based on your income and expenses.
Borrowing Capacity Calculator →Monthly Repayment Reality
Let's look at what higher rates mean for monthly budgets on a $1 million loan over 30 years:
| Interest Rate | Monthly Payment | Total Interest Paid |
|---|---|---|
| 3.0% | $4,216 | $517,760 |
| 4.0% | $4,774 | $718,640 |
| 5.0% | $5,368 | $932,480 |
| 6.0% | $5,996 | $1,158,560 |
| 7.0% | $6,653 | $1,395,080 |
At current rates (~6%), you're paying nearly $1,800 more per month compared to the COVID-era lows. That's real money that affects what buyers can afford.
💰 Calculate Your Mortgage Repayments
See exactly what your repayments would be at different interest rates.
Mortgage Calculator →What This Means for St George Property Prices
Market Adjustments by Suburb Type
Based on my daily experience in the market, here's what I'm seeing:
Premium Suburbs (Brighton-Le-Sands, Sans Souci, Dolls Point):
- Price softening: 5-10% from 2023 peaks
- Still strong demand from qualified buyers
- Waterfront properties holding value best
- Price adjustment: 8-12%
- Longer days on market
- More negotiation room for buyers
- Price correction: 10-15%
- Increased first home buyer activity
- Better opportunities for upgraders
- Rate increases (budget for another 0.5-1%)
- Lifestyle expenses (don't become "house poor")
- Unexpected costs (repairs, job changes)
- Fixed portion provides payment certainty
- Variable portion allows extra repayments and flexibility
- Reduce interest charges immediately
- Maintain access to your money
- Achieve effective "savings" of 6%+ (the current loan rate)
- Professional staging
- Minor repairs and paint touch-ups
- Garden and entrance presentation
- Professional photography
- Extended settlement periods
- Rent-back arrangements
- Inclusions (furniture, appliances)
- RBA to begin gradual cuts in late 2026
- Variable rates likely to ease to 5.5-6% by mid-2027
- No return to COVID-era lows (2-3%) expected
- People want to live near beaches and rivers
- Good schools will always attract families
- 15km from Sydney CBD will always have value
- Community-feel suburbs remain desirable
- Household income: $180,000-$220,000+
- Deposit: 20% ($360,000-$400,000)
- Household income: $120,000-$150,000
- Deposit: 10-20% ($60,000-$150,000)
Mid-Range Suburbs (Bexley, Kogarah, Rockdale):
Entry-Level Suburbs (Banksia, Arncliffe, Carlton, Kingsgrove):
The St George Advantage
Why has our region remained more resilient than many Sydney areas? Five key factors:
1. Established Infrastructure: Schools, transport, and amenities are already built—no "wait and see" risk 2. Diverse Buyer Pool: From first home buyers to downsizers, demand comes from multiple sources 3. Limited Supply: Not much new land available means scarcity value 4. Lifestyle Value: Beach access, Georges River, community feel—these don't depreciate 5. CBD Proximity: 14-20km to the city with excellent train links remains attractive
Strategies for Buyers in Today's Market
1. Focus on Borrowing Capacity, Not Maximum Price
Don't stretch to your absolute limit. Target 10-15% below your maximum borrowing capacity.
Why? You need buffer for:
2. Consider Fixed vs Variable Trade-offs
Many buyers are currently splitting 50/50 between fixed and variable:
3. Negotiate Harder
In today's market, there's more room to negotiate—especially on properties that have been listed for 30+ days.
What I'm seeing: Buyers achieving 5-10% below asking on listings that haven't sold quickly. Don't be afraid to make offers.
4. Look for Value Suburbs
These St George suburbs offer excellent entry points right now:
| Suburb | House Entry Point | Unit Entry Point |
|---|---|---|
| Banksia | From $1.6M | From $600K |
| Arncliffe | From $1.3M | From $580K |
| Carlton | From $1.5M | From $550K |
| Kingsgrove | From $1.6M | From $520K |
5. Use Offset Accounts Strategically
If you have savings, an offset account lets you:
Strategies for Sellers in Today's Market
1. Price Realistically From Day One
Overpriced properties become stale listings. In today's market, getting your price right from the start is critical.
The data speaks: Properties priced correctly sell within 4 weeks. Overpriced properties often sell for LESS than if priced right initially—after sitting for months.
📊 Estimate Your Selling Costs
Understand exactly what you'll receive after commissions, marketing, and fees.
Selling Costs Calculator →2. Presentation is Critical
When buyer pools are smaller, you need to impress everyone who walks through.
Investment recommendation: Spend $5,000-$10,000 on presentation to potentially gain $30,000-$50,000 in sale price.
Focus on:
3. Be Flexible on Terms
Sometimes flexibility on terms can be more valuable than a higher price:
4. Market Aggressively
Reach every potential buyer. In a slower market, comprehensive marketing ensures you don't miss qualified buyers who might be looking in different channels.
5. Consider Off-Market Testing
Before committing to a full campaign, gauge market interest through our off-market buyer database. This can help set realistic expectations and identify serious buyers.
The Future Outlook
What the Experts Are Saying
Most economists predict:
What This Means for You
For buyers: The current market offers negotiating power you won't have when rates drop. Buying now at a slightly higher rate with a better purchase price could be the smart play.
For sellers: Don't wait for a market that may not materialize. Today's serious buyers are well-qualified and ready to act.
The Long-Term Perspective
Here's what 25+ years in real estate has taught me:
Property is a long game. Whether rates are at 4% or 7%, the fundamentals of St George haven't changed:
Those who bought during the 1990s high-rate era built significant wealth. Those who waited "until rates came down" often found themselves priced out by the growth that followed.
Frequently Asked Questions
Should I buy now or wait for rates to drop?
No one can time the market perfectly. What I tell my clients: If you find the right property at a fair price, and you can afford the repayments at current rates, you're in a good position. Don't bet your financial future on rate predictions.
How much do I need to earn to buy in St George?
For the current median St George house (~$1.8M-$2.0M), you'd typically need:
For entry-level suburbs (units or townhouses):
Will St George prices crash?
Based on supply/demand fundamentals, I don't see a crash scenario for St George. Price adjustments of 10-15% from peaks? Yes, we've seen that. A 30-40% crash? The fundamentals don't support it—demand remains strong and supply is limited.
Is now a good time to sell?
It depends on your circumstances. If you need to sell, the market is active with qualified buyers. If you're upgrading within St George, you benefit from both sides of the equation.
What's the best strategy for first home buyers?
Focus on entry-point suburbs, maximize your deposit, and don't overextend. Consider starting with a unit or townhouse—building equity is more important than starting with a house.
📱 Essential Calculators for Your Property Journey
Ready to Navigate This Market?
Whether you're buying, selling, or just exploring your options, I can help you make informed decisions in today's interest rate environment.
Let's have a conversation about your specific situation. No pressure, no jargon—just honest advice from someone who's seen multiple market cycles and helped hundreds of families through each one.
📞 Call: 0411 818 171 📧 Email: [email protected] 🗓️ Book a consultation: Schedule a free chat
Michael Kalinovski | St George Real Estate Specialist "Recognised | Respected | Recommended" 25+ Years Experience | 500+ Families Helped
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