RBA Rate Hike Set to Slam Australia's Housing Market

Australia's housing market is facing its worst downturn in decades as interest rates continue to rise. The Reserve Bank of Australia (RBA) is expected to lift interest rates for a fourth time next Tuesday, taking them to a 15-year high of 4.6 per cent.

This rate hike comes despite the country's housing prices falling nearly 4 per cent from their peaks, with some economists predicting a peak-to-trough fall of up to 13 per cent.

RBA Governor Michele Bullock has acknowledged that the central bank is facing new challenges in managing inflation and the economy. 'I think we're moving into a new world,' she said, citing global shocks to the supply side of the economy as difficult for monetary policy to deal with.

While households are still resilient due to an unusually strong labour market, economists warn that higher rates will only exacerbate the housing downturn and make it more difficult for the RBA to cut rates in the future.