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 Follow our Australia news live blog for latest updates Get our breaking news email, free app or daily news podcast 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. For instance, there was a short-lived fall from April 2020 during the Covid-19 pandemic lockdowns, when the average capital city home value fell by 1.5% over three months. Two years later, and at the tail end of a massive boom, there was a much steeper decline after the RBA started its rearguard battle against roaring inflation. Between April 2022 and January 2023, prices dropped by 8.1%. The largest downturn in p