Australian Housing Market Defies Central Bank’s Tightening Efforts - Property Inc

Australian Housing Market Defies Central Bank’s Tightening Efforts

Australia’s property market continues to witness a surge in prices, with supply shortfalls and escalating demand taking center stage. Despite the Reserve Bank’s rigorous policy tightening measures, the housing market’s growth remains unchecked.

In August, demand arising from a burgeoning population was quick to gobble up the new housing supply, overshadowing the impact of the central bank’s determined tightening strategy. As reported by Swati Pandey in Bloomberg, “Sydney prices, the national bellwether, advanced 1.1% and are up 8.8% from a January trough.” Furthermore, Brisbane outpaced other cities with a 1.5% gain in August, with every major city except Hobart in Tasmania observing an expansion.

Tim Lawless, the research director at CoreLogic, commented on the market’s resilience, stating, “It’s clear the Australian housing recovery is firmly entrenched.” Lawless further emphasized the persistent nature of the demand, adding, “Housing demand from strong population growth is set to remain a feature over the coming years, and we are yet to see any material supply response”.

However, this unexpected recovery poses potential concerns for policymakers. With the property market’s revival, households that feel wealthier might increase their spending, potentially exacerbating inflationary pressures. August data showed a 15.5% decline in the total advertised housing supply compared to the previous year across the eight major cities.

In a separate piece, Greg Jericho discussed the Reserve Bank’s recent decision to halt its streak of interest rate hikes. This decision comes after the most aggressive series of increases in over 30 years, aiming to mitigate the risk of the economy decelerating more than anticipated.

Jericho pointed out, “For the first time since April last year, the RBA has now gone two months without increasing rates.” The article also highlighted that unless there’s unexpected growth in wage or inflation data, the cash rate is poised to remain at 4.1%. This respite will be a boon for mortgage holders who have endured a 98% rise in mortgage payment costs since the previous March.

While interest rate hikes directly impacted home lending, with an 18% decline in the past year, the Australian housing market remains resilient. As Jericho noted, the drop in home loans can be attributed to a surge in lending due to near-zero interest rates and government stimulus before the pandemic.

In conclusion, the Australian property market’s defiance against tightening measures presents both opportunities and challenges. Policymakers will need to tread carefully to ensure the nation’s economic stability while accommodating the housing needs of its growing population.


Pandey, Swati. “Australia Property Prices Accelerate as Supply Shortfall Bites.” Bloomberg, August 31, 2023. 

Jericho, Greg. “Australian house prices look set to rise despite the rate hikes. This isn’t great given how expensive they already are.” [Publication], [Date of Publication]. ↩ 

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