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The end of the low interest rate era is here and it weighs on house prices
Since the low point of February 2023, the national median house price has increased another 35 per cent. (ABC News: Che Chorley)
We seem to have flipped from worrying about rising house prices to worrying about falling house prices.
Last Tuesday's front-page lead in The Australian, reporting the July house price data, was "$230 billion hit: value going, going, gone", describing it as a "once-in-a-generation housing slump".
It does sound like a lot, but it is just a 1.8 per cent decline from $12.77 trillion to $12.54 trillion, so just an old-fashioned page-one beat-up.
Next day, they followed up with "ALP turns blind eye to house market mugging", another beat-up, quoting NAB's new forecast that house prices in major east coast cities (Melbourne and Sydney) would fall 10 per cent.
Mosman to Toorak: The 50 biggest suburb house price falls revealed
Australia’s most exclusive postcodes, from Sydney’s Point Piper, Mosman, Vaucluse, Hunters Hill and Woollahra to Melbourne’s Toorak and Kew East, are bearing the brunt of the housing downturn, a correction that economists say will reduce pressure on the Reserve Bank to raise interest rates again.
North Curl Curl on Sydney’s northern beaches has led the nation’s price declines, with median dwelling values tumbling 19.4 per cent from their September 2025 peak of $4.1 million to $3.3 million in July.
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Can Australia make housing affordable while avoiding a major market crash? We may soon find out
Politicians’ fever dreams of ‘sustainable price increases’ – where values keep rising but by less than wages – could happen
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The Reserve Bank has hiked interest rates and the property market is in retreat. So far, so normal.
There is a sense that this year’s fall in home prices feels different from previous episodes. The data tells another story.
Over the past four decades there have been seven property market downturns of varying length and depth, according to analysis put together by Shane Oliver, AMP’s chief economist.
They are often triggered by interest rate hikes, which make home loans more expensive, but they also occur during crises and policy changes.
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