Exploring Drivers of Extreme Housing Prices in Australia
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arXiv
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| Autori principali: | , , |
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| Natura: | Preprint |
| Pubblicazione: |
2026
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| _version_ | 1866910149667454976 |
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| author | Burtenshaw, Grace Burtenshaw, Ashley Carney, Meagan |
| author_facet | Burtenshaw, Grace Burtenshaw, Ashley Carney, Meagan |
| contents | In recent years Australia has observed a growing, unexplained resilience of increasing house price trends. Here, we seek to understand what is driving Australia's indestructible asset using insights from market experts. We construct a differential equation model of house price to develop intuition for its historical behaviour and responsiveness to changes in mortgage rates. Using this model, we identify a point of 'decoupling' between house price and mortgage rate in the system with supply limitations found to be the main driver for this change. From there, modern extreme value techniques are implemented on real-world data to investigate how the effectiveness of mortgage rate in moderating extreme house price has changed before and after this historical decoupling. We find that without an increase in the housing supply chain, through either deregulation or reduced competition with government building, an 11\% increase in mortgage rate will be needed to slow extreme housing costs. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2604_18605 |
| institution | arXiv |
| publishDate | 2026 |
| record_format | arxiv |
| spellingShingle | Exploring Drivers of Extreme Housing Prices in Australia Burtenshaw, Grace Burtenshaw, Ashley Carney, Meagan General Finance Probability Applications In recent years Australia has observed a growing, unexplained resilience of increasing house price trends. Here, we seek to understand what is driving Australia's indestructible asset using insights from market experts. We construct a differential equation model of house price to develop intuition for its historical behaviour and responsiveness to changes in mortgage rates. Using this model, we identify a point of 'decoupling' between house price and mortgage rate in the system with supply limitations found to be the main driver for this change. From there, modern extreme value techniques are implemented on real-world data to investigate how the effectiveness of mortgage rate in moderating extreme house price has changed before and after this historical decoupling. We find that without an increase in the housing supply chain, through either deregulation or reduced competition with government building, an 11\% increase in mortgage rate will be needed to slow extreme housing costs. |
| title | Exploring Drivers of Extreme Housing Prices in Australia |
| topic | General Finance Probability Applications |
| url | https://arxiv.org/abs/2604.18605 |