RBA Interest Rate Rises Crush Home Ownership Dreams

Research by University of Sydney economist Dr James Graham has found that a single interest rate rise by the Reserve Bank of Australia (RBA) can suppress home ownership for more than a decade.

The study analyzed housing statistics and used a large-scale model to show how monetary policy affects Australians' ability to buy and own homes over time.

According to Dr Graham, a standard 0.25 percentage point increase in interest rates leads to an immediate five percent decline in home purchases, with buying remaining low for up to two years.

Home ownership rates also fall following a rate rise, declining by 0.1 percentage points within the quarter following a rise and continuing to fall for four years before reaching their lowest point at 0.3 percentage points below baseline.