Aerial view of suburb
  • 23 Aug 2022
  • 3 min read
  • By Shaun O'Dowd

How economic factors are affecting house prices

House prices, Economy

Queensland and Australia are going through unprecedented economic times with rising interest rates and inflation being coupled with 50-year-low unemployment.

At the recent REIQ Property Insider Lunch, Market Economics Managing Director Stephen Koukoulas outlined what the economic factors might mean for the housing market. Here's some of what he had to say:

Economic snapshot

Koukoulas says inflation is likely to hit a 30-year high at seven to eight percent while interest rates will keep rising.

Employment is at a 50-year low of below four percent and the economy is still quite strong.

While consumer sentiment has fallen, households are still spending strongly.

Koukoulas says the supply chain pressures that contributed to higher prices for goods and services - pushing up inflation - are easing.

This could lead to inflation peaking very soon.

Household wealth

Koukoulas says household assets or wealth is strong with assets outweighing liabilities overall.

"Consumers are also cashed up, have a job, are getting a pay rise," he says. "Expect growth in consumer demand to remain solid."


CoreLogic data has shown rents have surged in Brisbane, with house rents growing by 12.8 percent in the year until May 2022 and units climbing 8.1 percent during the same period.

Brisbane vacancy rates were at 0.9 percent for houses and 0.8 percent for units.

Koukoulas says while new dwelling building approvals are remaining resilient, the time to completion is rising.

"A shortage of materials is extreme and holding back the supply of new dwellings coming onto the market (thus putting pressure on housing supply)," he says.

Wages are due to rise

While commentary has focused on wages remaining stagnant despite low unemployment, Koukoulas says the demand for workers will lead to rising wages.

He says skills shortages persist but with international borders reopening, the government appears to be targeting a moderate level of skilled migration.

"Despite all of the talk of interest rates and tax policy driving house prices in Australia, it's population that drives house prices in the long run," Koukoulas says

"Strong population growth means strong house price growth."

The outlook

Koukoulas says the inflation surge could be easing with interest rates peaking as soon as quarter one, 2023.

He believes a lower peak for interest rates and strong population growth will make any weaknesses in the housing market shallow and short-lived.

"A strong labour market is good for consumer spending - offsetting the effect of rate hikes at least partly."

Find out more about REIQ events here.

Start your Real Estate Career

Our approach to training is career focussed to support all members of the profession. 

From accredited training to start your career to upskilling courses that advance your career, the REIQ keeps you a real step ahead.

Need help? 1300 697 347 or contact us