Rate hikes could deny home ownership to up to 30,000 Australian households

A study by University of Sydney senior lecturer James Graham and Northwestern University PhD candidate Avish Sharma estimates that each standard interest-rate increase in Australia could keep up to 30,000 households from achieving home ownership, many for more than ten years. Their model shows a 0.25-percentage-point rise triggers an immediate 5% fall in housing purchases, with buying activity remaining subdued for up to two years.

The resulting dip in the home-ownership rate is about 0.1 percentage points within weeks, expanding to a 0.3-point decline after four years from a baseline of roughly 66%. The researchers note that early hikes have the strongest effect, while later increases hit a more resilient segment of buyers. They also suggest policy tweaks, such as revisiting mortgage serviceability buffers and stamp-duty structures, to lessen the long-term impact.