Dr Sam Wylie

And it's this, that people think that interest rate increases will tank the property market.

in Australia.

The RBA increases interest rates by 2% or 3% to fight inflation.

Mortgage rates will go up by 2% or 3%.

That's correct.

Then house prices will go down by a huge amount.

Some people are saying 15% or 20%.

I think that's very unlikely for a good reason, and it's this reason.

It's that when the demand for shares, for instance, let's just jump back to the stock market.

When the demand for shares goes down because people are worried about inflation or growth or something else, the supply stays the same.

There's still the same number of shares available for sale.

So to get back to an equilibrium where demand and supply for the shares equal each other, price has to go down a lot.

Prices have to go down until some people who previously wanted to sell now want to buy.

All of the getting back to equilibrium from lower demand occurs in the price changes.

Now, when you go to the property market, to the residential property market, that's not true.

When prices start to fall because of lower demand, interest rate goes up, people aren't buying as many houses, demand's down, prices start to fall, supply goes down.

People step back from the market.

You know what?

I was going to sell my house in Randwick and move to Fremantle.

in Western Australia, but now I'm not because my house price has gone down and I'm going to wait till it goes up.