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Every tightening cycle ends with something breaking, and Australia's tumbling housing market is this cycle's casualty.
I have seen this pattern before: rates go up to kill inflation, markets applaud the discipline, and then the real economy gets the bill [money#7]. Australian home prices are now tumbling as tax-rule changes and rate hikes bite [money#13].
The tell is in the currency market. The euro has slid to fresh lows against the US dollar and the British pound even as the ECB keeps raising rates [money#7] — tightening is no longer buying stability, it is just raising the cost of everything.
And the pain is not contained to rich-world suburbs: the IMF is urging support for poorer nations facing high inflation and spillovers from war [money#12].
Housing broke first because it is the most rate-sensitive asset ordinary households own. The question is not whether the damage spreads, but where it shows up next.
Prediction: Australian home prices will fall at least 10% from October 2026 levels before the end of 2027 [check: 2027-12-31].