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Two or even three more Reserve Bank interest rate hikes would be "devastating" for the property market but still leave housing more unaffordable than ever, experts say, because higher borrowing costs would outweigh any benefit from lower prices.
The RBA's monetary policy board is expected on Tuesday afternoon to announce an increase in its cash rate to 4.6%, from 4.35%. That decision alone would add another $100 to the monthly mortgage interest bill on a $700,000 loan.
Several analysts are tipping a further interest rate rise — the fifth this year — on Melbourne Cup day. Financial markets are even pricing in a 60% chance of a sixth rate increase by mid-2027.
As petrol prices push towards $2.40 a litre, Shane Oliver, AMP's chief economist, said two or three more rate hikes would be "overkill" given the already weakened state of the economy and families' finances.
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% — the highest since just before the global financial crisis, Oliver said.
Another hike to 5.1% "is going to cause major problems for households with mortgages," he said, pointing out that debt burdens have become substantially larger over the past two decades.
"And 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."
Tom Devitt, senior economist at Housing Industry Australia, said the HIA's national affordability index hit the lowest in history at the end of June.
Source: Guardian World — https://www.theguardian.com/australia-news/2026/sep/29/further-interest-rate-hikes-could-devastate-property-market-without-easing-unaffordability