High interest rates are here to stay, but that's only part of the house price story. The recent media frenzy around falling house prices has sparked a shift in public concern, from rising prices to a potential slump. However, the narrative is more complex than a simple decline. The national median house price has increased by 35% since February 2023, despite interest rate hikes and policy changes. This growth is attributed to factors such as immigration, construction costs, and dwelling approvals. A 10% fall in house prices would be a significant event, but it's challenging to predict due to various economic and demographic factors. The end of the low-interest rate era, driven by global trends and AI's demand for compute, is a key factor. AI's exponential growth increases the need for data centers, potentially impacting interest rates and housing affordability. Migration plays a crucial role, with the government's target of 225,000 net overseas migrants for the current financial year. Achieving this goal while addressing the housing shortage and skilled labor demand is a complex task. The article concludes that while high interest rates will continue to influence house prices, other factors like migration and AI's impact on the economy are equally significant, making the housing market a multifaceted issue.
