Australian mortgage holders could face another three interest rate hikes in 2026, a mark not seen since the global financial crisis, as a leading property expert predicted house prices to flatline or fall across the major cities.<\/p>\n
Soaring fuel prices have smashed the economy amid a new conflict in the Middle East, with added costs and general economic anxieties appearing to soften housing demand.<\/p>\n
Now major bank Westpac has forecast another triple rate hike by the end of this year, which would take the cash rate to 4.85 per cent, and no cuts until 2028.<\/p>\n
Property researcher and consultant Cameron Kusher said falling auction clearances and weak price growth in Sydney and Melboure were indicators the market was already struggling ahead of more financial pain for mortgage holders and potential buyers.<\/p>\n
\u201cThe market at the moment is expecting at least two further interest rate increases this year and possibly more likely than not a third,\u201d he told news.com.au.<\/p>\n
\u201cTwo interest rate increases takes us back to the highest rates we\u2019ve had since 2011. A third one takes us back to the highest interest rates we\u2019ve had since \u2026 the global financial crisis was just hitting. <\/p>\n
\u201cSo a lot of people have never experienced interest rates this high, and obviously property prices and mortgage sizes are a lot larger than they were back in 2008. <\/p>\n
\u201cI think for all of those reasons \u2026 I\u2019m getting pretty bearish on property.\u201d<\/p>\n
Money markets last week began pricing in another three interest rate rises in Australia by the end of the year, which would lift the cash rate to 4.85 per cent.<\/p>\n
There has already been two hikes in 2026, which economists had forecast even before the Iran war broke out due to high inflation.<\/p>\n
Wespac chief economist Luci Ellis said the bank\u2019s shift reflected \u201cthe longer disruption to and slower recovery in fuel supply assumed in the revised baseline forecasts \u2026 with the Strait of Hormuz essentially closed for eight weeks and traffic recovering only slowly after that\u201d. <\/p>\n
\u201cIt also reflects the surprisingly rapid pass-through of higher fuel and other oil-derived product prices into other prices in Australia,\u201d she said.<\/p>\n
\u201cWe believe the RBA will respond to this pricing behaviour by tightening monetary policy by more than would have been needed absent that pass-through.\u201d<\/p>\n
She said the Reserve Bank would take a \u201conce bitten, twice shy\u201d approach to unwinding rate rises in forecasting cuts from February 2028, although added \u201cwe have low conviction about the exact timing\u201d.<\/p>\n
Canstar modelling showed another three hikes would add $457 per month to repayments on a $600,000 mortgage, $609 for a $800,000 loan and $762 at $1 million since the start of 2026.<\/p>\n
Canstar\u2019s data insights director Sally Tindall said borrowers were in for a tough couple of years if Westpac\u2019s forecasts were correct.<\/p>\n
\u201cWhile the other big banks are tipping just one more hike, Westpac is now forecasting a far more aggressive path, which would take the cash rate to levels we haven\u2019t seen since the fallout from the GFC,\u201d she said.<\/p>\n
\u201cThe flow-on effect of higher fuel costs has already started pushing up prices elsewhere. The RBA may feel like it has to act because once prices go up, they rarely come back down.\u201d<\/p>\n
Mr Kusher said although a 4.85 per cent cash rate was not that high on a historic basis, it would fundamentally shift behaviour on the property market.<\/p>\n
\u201cI think the people that will be transacting are people that really have to sell,\u201d he said.<\/p>\n
\u201cThe people that are buying will be people that may have already sold and having to move into something small or people really looking for bargains in this market. <\/p>\n
\u201cSo I can\u2019t see, if this war continues to roll on, if inflation remains elevated, if interest rates have to rise, I can\u2019t really see a situation where there\u2019s going to be enough demand in the market to push prices higher.\u201d<\/p>\n
SQM Research this month forecast home prices in Sydney and Melbourne to fall in 2026<\/a> due to the impact of war in the Middle East, something Mr Kusher agreed with.<\/p>\n \u201cObviously Melbourne\u2019s been underperforming for quite a long time, but Sydney\u2019s the most expensive market in the country. <\/p>\n \u201cI think prices will go back there. And I think the other capital cities, while prices will continue to rise, that rate of growth is likely to slow, especially as interest rates are pushed higher.<\/p>\n \u201cI don\u2019t think we\u2019re looking at catastrophic falls, but I think we could see prices fall four or five per cent. <\/p>\n \u201cAnd then depending on how long interest rates remain elevated, we could see more falls into 2027 as well.\u201d<\/p>\n Auction clearance rates dropping<\/p>\n Depending on the source, the reported auction clearance rate from the weekend varied across a number of data sets. But most agree it has fallen in recent weeks.<\/p>\n Results recorded by realestate.com.au on Monday showed a clearance rate of 48 per cent from more than 1700 homes listed for auction between March 23 and 29.<\/p>\n Of those, 451 were sold prior to auction, 220 passed in, 723 were withdrawn and 386 sold under the hammer. <\/p>\n This does not fully capture total results as there was a total of 2072 NSW auctions scheduled in that period. Another 1536 private sales took place.<\/p>\n Cotality data from the week ending March 29 put Sydney\u2019s clearance rate at 57.9 per cent, while Domain recorded a 55 per cent clearance rate \u2013 down from 65 per cent in March 2025.<\/p>\n ANZ chief economist Shane Oliver, speaking to the Domain figures, said the trajectory meant price falls were on the horizon.<\/p>\n \u201cClearances are continuing to fall with more rate hikes likely & the War depressing buyer confidence & pushing up listings,\u201d he wrote on X.<\/p>\n \u201cWithdrawals are also up. Looks headed for price falls.\u201d<\/p>\n Auctioneer Tom Panos has been chronicling the drop off on his social media<\/a>, and previously told news.com.au a \u201cperfect storm\u201d had hit the property market.<\/p>\n He said on Saturday that out of the 12 auctions he was scheduled to oversee, five of them sold on the day.<\/p>\n \u201cAgain we saw a pattern of properties being sold prior or being cancelled,\u201d he said.<\/p>\n Mr Panos had previously spoken about there being two markets emerging \u2013 with properties at lower price points still seeing strong demand.<\/p>\n But, he said, \u201cnow we\u2019re seeing for the first time the lower price point being impacted\u201d.<\/p>\n Read related topics:Melbourne<\/a>Sydney<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Australian mortgage holders could face another three interest rate hikes in 2026, a mark not seen since the…\n","protected":false},"author":2,"featured_media":504554,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[1487,177009,177003,428,7614,177018,84,9920,177016,177021,177013,177014,1294,177010,10791,177020,7548,5366,177017,177005,177008,814,585,177019,177011,177004,177007,177026,8216,177002,7613,7618,13110,177012,177006,4984,12895,177025,177022,4188,177015,177024,52857,1288,177023,56,54,55,5536,6080],"class_list":["post-504553","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-asia","tag-auction-clearance-rates","tag-auction-clearances","tag-australia","tag-australia-and-new-zealand","tag-australian-mortgage-holders","tag-business","tag-cash-rate","tag-clearance-rate","tag-clearance-rates-dropping","tag-depressing-buyer-confidence","tag-economic-anxieties-appearing","tag-economy","tag-falling-auction-clearances","tag-global-financial-crisis","tag-grim-warning","tag-home-prices","tag-house-prices","tag-interest-rate-hikes","tag-interest-rate-increases","tag-interest-rate-rises","tag-interest-rates","tag-iran","tag-leading-property","tag-leading-property-expert","tag-leading-property-researchers","tag-lower-price","tag-lower-price-points","tag-melbourne","tag-mortgage-holders","tag-new-south-wales","tag-oceania","tag-perth","tag-price-falls","tag-property-expert","tag-property-market","tag-property-prices","tag-rate-hikes","tag-secondary-markets","tag-shane-oliver","tag-slowing-property-market","tag-soaring-fuel-prices","tag-southern-asia","tag-sydney","tag-tom-panos","tag-uk","tag-united-kingdom","tag-unitedkingdom","tag-victoria","tag-western-australia"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/504553","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=504553"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/504553\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/504554"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=504553"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=504553"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=504553"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}