What happened
University of Sydney School of Economics research led by James Graham found that each standard 0.25% RBA rate hike results in an immediate 5% decline in home purchases. The study indicates that buying activity remains subdued for up to two years following an increase.
Why it matters here
Higher borrowing costs hit vulnerable home buyers hardest, reducing overall transaction volumes and wealth creation. For property investors, potential further RBA rate tightening threatens to dampen buyer demand and slow price momentum across capital city housing markets.
What to watch
The Reserve Bank of Australia's next cash rate decision for signals on borrowing capacity trends.
Source
news.com.au