Rate rises could lock close to 30,000 households out of home ownership
A 0.25% rate increase is estimated to cut home purchases by 5% and eventually reduce home ownership by 0.3 percentage points.
A study by James Graham, a senior lecturer in economics at the University of Sydney, and Avish Sharma, a PhD candidate at Northwestern University, found each standard interest rate rise is estimated to cause an immediate 5 per cent drop in home purchases.
The home purchase decline translates to close to 30,000 Australian households locked out of ownership for years. The home ownership rate falls by 0.1 percentage points within weeks, peaking at a 0.3 point decline four years later.
The rate eventually recovers, but takes more than a decade. Dr Graham said life changes, job shifts, new children, bank lending changes, mean many buyers miss their window and stay excluded.
The RBA is widely expected to raise rates again on Tuesday.
- close to 30,000
- Households locked out per rise
- 5 per cent
- Immediate purchase drop
- 0.3 percentage points
- Peak ownership decline
- more than a decade
- Recovery time
Why it mattersThe research suggests the Reserve Bank's rate rises could cancel out the federal government's investment tax changes designed to boost home ownership.
AustraliaWith three rate rises already this year, tens of thousands of Australian families are being locked out of buying homes at a time when ownership is already near historic lows.
✓ Claims checked against the source and corrected before publish. checked 29 min ago
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