Warren Hogan

And the history shows that first home buyers tend to be about 15% of the mortgage market anyway.

And then every 10 years or so, we seem to have this surge of activity when house prices fall or interest rates fall or the government provides an incentive, usually all three at once.

So in 2000 and through the GFC, we saw it at the start of the pandemic.

So there's no doubt that when interest rates rise in every cycle, the most vulnerable are the first-time buyers who've got into the market in the previous sort of 12 to 18 months.

Quite rightly, when you're a first-time buyer and you're young, you take the most risk because you've got plenty of time.

And of course, your career is likely to see increases in income due to promotion, not just the normal increase in wages that everyone gets.

So there is a lot of risk that people will rightly take on.

But of course, that means you're vulnerable in those early stages.

And every time rates go up, that's where the pressure is felt, as well as highly leveraged investors.

But that's a different story.

This cycle, I'm particularly worried about it, both because of the bank of mum and dad phenomenon, getting a lot more people in, and also because of the speed with which rates are going up.

Now, the good news is that the employment markets are holding up so far.

But if that changes next week, the issue you raised comes into play.

And I think there's something we need to watch very closely because...

you do not want to see forced selling in any housing market.

We've avoided that broadly in the last 20, 30 years in Australia.

And you'd hate to see that because of the extra leverage brought into the system, because of the bank and mum and dad, the extra risk, if the circumstances change enough that you do get extra forced selling.

And I think that's something we need to watch closely.

At this stage, I have no reason to believe it's going to be severe, but it is certainly going to be a key dynamic at the margin of the property market.

It is.