Australian Housing Affordability Crisis Deepened by Higher Interest Rates

Higher interest rates in Australia have made it harder for people to buy homes, despite lower property prices. The Reserve Bank of Australia raised its cash rate by 0.25 percentage points to 4.60 per cent on September 29, the fourth increase this year.

The decision was intended to combat inflation and slow down demand, but it has also made borrowing more expensive for prospective buyers.

A couple earning $216,704 annually could borrow around $1.23 million earlier in the year, but that figure may now be closer to $1.099 million if rates increase again.

The effect of higher interest rates on household budgets is significant, with relatively small movements in the cash rate leading to large increases in mortgage repayments and reduced borrowing capacity.