{"id":630418,"date":"2026-09-28T21:24:53","date_gmt":"2026-09-28T21:24:53","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/630418\/"},"modified":"2026-09-28T21:24:53","modified_gmt":"2026-09-28T21:24:53","slug":"further-interest-rate-hikes-could-devastate-property-market-without-easing-unaffordability-reserve-bank-of-australia","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/630418\/","title":{"rendered":"Further interest rate hikes could \u2018devastate\u2019 property market without easing unaffordability | Reserve Bank of Australia"},"content":{"rendered":"

Two or even three more Reserve Bank interest rate hikes would be \u201cdevastating\u201d for the property market but still leave housing more unaffordable than ever as higher borrowing costs trump lower prices, experts say.<\/p>\n

The RBA\u2019s monetary policy board is widely expected on Tuesday afternoon to announce an increase in its cash rate<\/a> to 4.6%, from 4.35%, in a decision that will add another $100 to the monthly mortgage interest bill on a $700,000 loan.<\/p>\n

A number of analysts are tipping a further interest rate rise \u2013 the fifth this year \u2013 on Melbourne Cup day. Financial markets are even pricing in a 60% chance of a sixth rate increase by mid-2027.<\/p>\n

As petrol prices push towards $2.40 a litre<\/a>, Shane Oliver, AMP\u2019s chief economist, said two or three more rate hikes would be \u201coverkill\u201d given the already weakened state of the economy and families\u2019 finances.<\/p>\n

A rate hike on Tuesday would push the cash rate to its highest level since late 2011, and a further increase at the next meeting in November would push it to 4.85% \u2013 the highest since just before the GFC, Oliver said.<\/p>\n

Another hike to 5.1% \u201cis going to cause major problems for households with mortgages,\u201d he said, pointing out that debt burdens have become substantially larger over the past two decades.<\/p>\n

\u201cAnd it would be devastating for the property market. The higher you go [with the cash rate] the greater the chance you hit a tipping point, and instead of a 10% decline in home prices, you get more like a 15-20% drop.\u201d<\/p>\n

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Tom Devitt, senior economist at Housing<\/a> Industry Australia, said the HIA\u2019s national affordability index hit the lowest in history at the end of June.<\/p>\n

The silver lining from falling home values is that it makes it easier for first-time buyers to get into the property market.<\/p>\n

Devitt said he had expected affordability to improve over the second half of this year and perhaps into 2027 \u2013 but that was predicated on the RBA not pushing borrowing costs higher.<\/p>\n

Tuesday\u2019s anticipated rate hike, alongside the prospect of more to come, had changed the calculus.<\/p>\n

\u201cIn this cycle we now don\u2019t see any improvement in affordability at all,\u201d he said.<\/p>\n

Taylor Nugent, a senior economist at NAB, said the prospect of more interest rate hikes suggested property values would fall further and for longer than anticipated.<\/p>\n

Beyond prices, Nugent said the fundamental issue with the housing market \u2013 too many people chasing too few homes \u2013 was evident in an ongoing lack of rental properties and climbing rents<\/a>.<\/p>\n

\u201cHousing affordability is a challenge not just for people trying to buy, but people renting as well,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"Two or even three more Reserve Bank interest rate hikes would be \u201cdevastating\u201d for the property market but…\n","protected":false},"author":2,"featured_media":630419,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[114,184,85,46],"class_list":["post-630418","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-il","tag-israel"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/630418","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=630418"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/630418\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/630419"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=630418"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=630418"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=630418"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}