One of Australia’s top economists has warned mortgage holders to brace for more pain, tipping two further interest rate hikes and the first broad fall in national home prices in years. AMP chief economist Shane Oliver says cracks are emerging in a three‑decade housing ‘super cycle’ as higher rates and looming tax changes start to bite.
Oliver defines a housing super cycle as a 20 to 40 year period of sustained price growth.
He says Australia’s recent upswing was powered by falling interest rates and expanding credit, strong population growth, tight supply, investor tax breaks and the rise of dual‑income households.
That engine is now sputtering.
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Speaking to the Daily Mail, Oliver argues the cycle is under pressure from higher long‑term rates, worsening affordability, tighter tax concessions for investors and a policy tilt towards lower immigration – a mix he says could threaten to end decades of house price gains.
“After 8.9 per cent growth in 2025 we now anticipate a fall in national average home prices of around 1 per cent this year and 5 per cent over 2026–27,” he said.
AMP chief economist Shane Oliver.
While price falls could spell good news for home buyers, mortgage holders could brace for more financial pain.
Oliver expects the Reserve Bank to deliver two more hikes, lifting the cash rate to a 4.85 per cent peak.
On a $600,000 mortgage, he estimates that would add about $200 a month in repayments.
For borrowers with $600,000 outstanding and 25 years remaining, the three hikes already delivered in 2026 have increased monthly repayments by $272 since January.
A further two hikes would see mortgage holders pay almost $500 more than they did at the start of the year.
“The RBA has raised rates three times back to their prior 2023 cycle high. While it’s likely to leave rates on hold this month we expect another hike in August,” Oliver said.
The affordability squeeze is front and centre in his call.
Australian dwelling price growth.
He notes the ratio of home prices to wages and incomes is at record highs, and rising mortgage rates are widening the gap between what buyers can pay and current asking prices. Confidence has slumped and perceptions of whether it’s a good time to buy have deteriorated.
Still, he stops short of calling time on the super cycle.
Oliver stresses that a crash would require widespread forced selling, which he sees as unlikely without a sharp rise in unemployment.
Further Interest Rate rises will cause financial pain for a Killarney Vale family.
“Calls for an imminent end to the property super cycle need to be treated with some caution though,” he said.
“I thought it might be close to over five years ago, but it was extended by a surge in immigration coming out of the pandemic and constrained home building resulting in a chronic undersupply of housing.
“A crash would require wide scale forced selling by homeowners – but without much higher unemployment forcing homeowners to sell this is unlikely as Australians will do whatever they can to keep servicing their mortgage.”
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