In a recent episode of Property Insights, finance heavyweight Mark Bouris and veteran real estate auctioneer Tom Panos sat down for one of the more sobering conversations to hit the Australian property commentary circuit in years. The title “Four More Rate Hikes???” was enough to stop any mortgage holder mid-scroll. But beyond the clickable headline lies a deeper, more urgent discussion about the structural pressures now converging on Australia’s housing market.
If you haven’t watched it yet, here’s the short version: we are living through a moment that has echoes of the worst economic periods in modern Australian history, and not enough people in power are treating it with the seriousness it deserves.
Panos and Bouris drew comparisons to the early 1990s, when interest rates climbed to 18% and auction rooms fell eerily silent. The parallels to today are uncomfortable. The RBA has now delivered back-to-back rate rises in February and March 2026, pushing the cash rate to 4.10%, reversing the three cuts delivered throughout 2025 and catching many borrowers off guard.
What makes the current environment arguably more treacherous than past cycles is the sheer size of the debt Australians are carrying. When rates climbed to 18% in the early nineties, median house prices were a fraction of today’s figures. Now, first home buyers in Sydney are entering the market at a median of $1.75 million and Bouris and Panos walked through a live case study of a buyer committed to $1.5 million, servicing roughly $8,500 per month in repayments. That is not an abstract number. That is a family’s entire take-home pay.
The RBA’s rationale has been clear: inflation picked up materially in the second half of 2025, the labour market remains tight, and an ongoing energy price shock driven in part by Middle East conflict is adding further pressure on prices. With trimmed mean inflation still forecast to remain above 3% throughout 2026, the Board has signalled it is prepared to do more.
Markets have been listening. Financial forecasts now point to the possibility of a further two or three increases in 2026, potentially pushing the cash rate as high as 4.85%, an 18-year high. CBA, previously expecting just one hike this year, has revised its outlook to include a May increase. Westpac’s chief economist has described the shift in the rate outlook since mid-2025 as “quite the turnaround.”
For borrowers already stretched thin after the 2022–2023 tightening cycle, this is a gut punch. As mortgage broker Alya Manji noted publicly, each 0.25% rise reduces average borrowing capacity by roughly $25,000. Two hikes doubles that impact, and for buyers with no wiggle room, that can mean exiting the market entirely.
One of the most powerful observations in the Bouris-Panos conversation was the idea of a bifurcated Australia: on one side, asset-rich, mortgage-free households largely insulated from rate rises, some even benefiting from higher returns on savings. On the other, a growing cohort of heavily leveraged homeowners, recent first home buyers, and renters who are being squeezed from every direction.
The data backs this up starkly. According to the Australian Institute of Health and Welfare, nearly 45% of households with a mortgage are now spending more than 30% of their disposable income on housing costs, the widely accepted threshold for “housing stress.” That figure was 24% in 2021. In Sydney, servicing a new housing loan now requires an estimated 68% of pre-tax household income.
Moody’s Ratings has also weighed in, warning that Australia’s national housing affordability measure hit 29.6% in March 2026, up from 28.6% just three months prior and that worsening affordability raises real risks of mortgage delinquency in RMBS portfolios. Sydney, at 40.4%, is the clear outlier. Brisbane, at 31.7%, isn’t far behind.
Bouris and Panos didn’t shy away from the uncomfortable truth around government intervention, and it’s a conversation that deserves wider airing. The expanded 5% first home buyer deposit guarantee, rolled out by the Albanese government in October 2025, was designed to get more people into the market. But as both men pointed out, and as economists and even the IMF have noted, demand-side subsidies in a supply-constrained market don’t make housing more affordable. They make it more expensive.
The cruel irony is that many of the Australians who took up that scheme in late 2025, stretching themselves to the limit with a minimal deposit, are now watching their borrowing buffer evaporate as rates rise. They were encouraged into the market at what is looking increasingly like the worst possible moment.
Meanwhile, the structural issues of chronic undersupply, high construction costs, a skilled labour shortage that slows new builds, and net overseas migration running above 300,000 per year are not going away. Population growth is real, and housing completions remain well below the levels needed to keep pace.
The most thought-provoking part of the episode was the pair’s frustration with the bluntness of monetary policy as the sole instrument being used to fight inflation. Bouris made the case that the RBA’s single tool, the cash rate, is a hammer being used to solve problems that require a scalpel. Rising rates punish mortgage holders indiscriminately while leaving asset-wealthy Australians largely untouched.
The call was for more targeted fiscal tools: means-tested relief for those in genuine distress, smarter approaches to demand management, and the political courage, invoking the legacy of Paul Keating, to make bold structural decisions rather than defaulting to the path of least resistance.
It is a reasonable argument. Rate rises work on inflation by destroying demand, but when a meaningful chunk of that demand is driven by population growth and structural undersupply rather than excess consumption, the bluntness of the tool becomes a real problem.
Bouris and Panos were right to sound the alarm. The combination of rising rates, stretched affordability, vulnerable first home buyers, a split economy, and policy tools that are poorly targeted for the problem at hand is a serious one. The question of whether Australia gets through this period with a soft landing or something more painful will depend in large part on decisions made in the next six to twelve months in Martin Place, in Parliament House, and at kitchen tables across the country. The conversation is worth having. The decisions that follow it are what matter.
This blog is general commentary only and does not constitute financial advice. For guidance tailored to your situation, speak with a qualified mortgage broker or financial adviser.
