Australia's Reserve Bank has raised the cash rate to 4.6 per cent, its highest level in nearly 15 years, with economists warning that house prices are likely to fall further and longer than in previous property downturns. This is the fourth rate rise of 2026, increasing monthly mortgage repayments by more than $450 since the year's start, whilst prospective home buyers now have $90,000 less borrowing capacity than in February. The downturn differs markedly from past cycles because household indebtedness is significantly higher than when rates last reached this level in 2011, meaning Australians feel the pain of increases far more acutely—homeowners now spend over half their income servicing mortgages, compared to roughly one third in 2011.

The combination of higher debt levels, cost-of-living pressures, and recent tax concessions removals for investors is expected to broaden the property downturn across all price brackets. National dwelling values have already fallen 3.1 per cent in the three months to end August, and the RBA signalled that lower house prices are an intended consequence of using interest rates to control inflation. However, higher rates simultaneously undermine housing construction, making building materials and labour more expensive, which experts suggest will ultimately lead to dearer housing in the longer term despite current affordability improvements.