One rate hike can lock buyers out of the market for over a decade, says economist | The Business

By ABC News (Australia)

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Ahead of a potential fourth interest rate rise from the RBA on Tuesday, new research shows just a quarter of a percentage point increase has an immediate and lasting effect on home affordability disproportionately hurting younger households. Using housing statistics and a detailed large-scale model, Dr James Graham from the School of Economics at the University of Sydney looked at how monetary policy affects Australians' ability to buy and own homes over time. He revealed his early findings on The Business, telling Alicia Barry, "a standard 0.25 percentage point increase in interest rates leads to an immediate five percent decline in home purchases, and buying remains low for up to two years," Although home ownership eventually begins to recover, Dr Graham says the modelling shows it does not return to its pre-rate-rise level for more than a decade. "It's not everyone that's being locked out. It's a proportion of those potential home buyers. But for them, that's a really big deal. Th

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